Prepare Your Budget For Student Loan Payments With A Test Run

Prepare Your Budget for Your Student Loan Payment by Taking It for a Test Run

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.

Photo by StartupStockPhotos.

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.

The 2 biggest mistakes recent grads make when it comes time to start repaying student loans [Business Insider]


Comments

    Aren't student loan (aka HECS) payments taken out of your pre-tax income every pay period once you reach a certain income, meaning you don't need to budget for them? At least it was for me when I finished uni ~ 10 years ago, but it may have changed since then.

    This looks like a repost of an article on Business Insider AU from the 28th of october (article is linked above), and also a repost of the same Business Insider US article from the 27th

    So it's American centric and not hugely relevant to an AU site

    Can confirm that HECS (HELP, or whatever its called now) still works in this way

    Last edited 28/11/16 11:31 am

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