Even a small student loan can be a big shock when you have to start paying it back. When you’re on a budget, it’s tough to get used to having to pay a hundred bucks or so every month. To make it easier, start setting aside the money before repayment kicks in.
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To get used to what your financial life will be like with student debt, it helps to prepare for your loan payment before it becomes an obligation. Factor it into your current spending so that when your budget actually changes, you’re used to it and you know what to expect.
Business Insider recommends doing this before you need to start paying it back. By preparing for this change, you can avoid what Brendan Coughlin, president of Consumer Lending for Citizens Bank, says is a common new graduate mistake: making spending commitments you don’t realise you can’t afford. For example, not realising just how big of a bite your loan repayment takes out of your monthly budget, you might sign a lease for a more expensive apartment.
Overall, the idea is: take your new spending commitment out for a test run so you can build and stick to a more realistic budget. And doing this before it actually becomes an obligation gives you room to make mistakes and adjust. Business Insider has more to say on this topic, so be sure to check out their full post at the link below.