MONEYBAG intelligence

Finances are a big part of life. Everything revolves around the exchange of money for goods. Its important to understand finances are not limited to matters of being exchanged for goods. Many people enjoy saving money for future expenses, or they make investment accounts that allow their money to multiple. I read a few articles that explained what financial literacy means and I saw some suggestions that can help one stay stable.

To have financial literacy one obtains the skills to invest, budget, and manage finances. Therefore, financial health is the state of your financial affairs. The Salal Credit Union taught me there were four keys to financial health. They revealed the key was maintaining boundaries within your spending, saving, borrowing, and planning. I enjoyed reading that it’s a good choice to allow yourself a fifteen percent debt gap, because as you make your payments, on time, you qualify yourself for rewards. They suggested saving ten percent of monthly earnings to build an emergency fund. Lastly, planning a budget could help you stay aligned with your needs versus your wants.

During another Google search, I came across an article from Investopedia that said financial health had four rules. The first rule is to form a budget which will allow you to know your net worth, they said this connects you deeper to yourself. This explained that a net worth is the result of the difference between your liabilities and assets. The second rule said its good to not live a lifestyle inflation, where your expenses increase because your money flow does too. They mentioned this path does damage for long-term living although it looks or feels good in the moment.

Then there are loans. A loan is borrowed money that is to be paid in full plus interest. A loan can be taken out for various reasons, but the most common reason is for school. In college you can receive financial aid. With financial aid you can receive loans, grants, or scholarships, however only loans must be paid back. I took a moment to read an article from the Federal Student Aid that answered various questions about how student loans work.

The article started off by explain there where many different forms of a loan. Student loans can be federal or private. Federal loans are supplied by the government whether it be from a private source or bank. I found it interesting they explained the difference between subsidized and unsubsidized was based on the financial need of it. I was informed that another loan exist called a Direct PLUS Loan. A Direct PLUS loan is not based on the need of financial assistance but on your credit score. Then there’s a consolidation loan where you have the potential receive all your assistance via one loan servicer.

The Federal student aid website also shared some suggestion on what to consider when you plan on applying for a loan. Being loans can range from $5,500-$25,500 depending on the type of loan and the amount of assistance you need. With numbers such as these, one should really consider how much of that money they’re willing to pay back, or how much they will be able to pay back. The article mentioned that it was wise to borrow small amounts at first, because it’s better to ask for more than to have too much. Lastly, loans can be seen as reassuring because they come with fixed interest rates which make payments manageable.

Student loans can be very beneficial when used correctly. I got one once, and I wish I had been more financially healthy. Although, I am not the type to borrow money! One day my money will come ready to be spent, not paid back! I am happy to know that a little budgeting can solve financial problems by helping us save which allow us to invest to make more money. Altogether, there are various ways to save, and I agree a person should start early regardless of how much you start with. I believe the hardest decisions become prioritizing necessities over desires. Investing your income into spaces that restrict your access are helpful in building emergency funds too.

sourced from:

Folger, J. (2021, October 21). Five rules to improve your financial health. Investopedia. Retrieved October 21, 2021, from https://www.investopedia.com/articles/personal-finance/111813/five-rules-improve-your-financial-health.asp.

The four pillars of Financial Health. Salal. (2020, September 30). Retrieved October 21, 2021, from https://www.salalcu.org/the-four-pillars-of-financial-health/.

Federal student loans for college or career school are an investment in your future. Federal Student Aid. (n.d.). Retrieved October 21, 2021, from https://studentaid.gov/understand-aid/types/loans.