Planning For Your Future - Essay Sample

Introduction

General financial decision making in college years are critical since they have both short and long-term effects. Students loan debt is usual and expected in the society currently for students during their college year after graduation (Ingersoll and Jonathan n.p). Again, college tuition is on the rise, and a lot of students have setbacks paying for their student's tuitions. Therefore, to cater for such fee, many students are compelled to seek for loans. Unfortunately, saving has taken a backseat, and this has dramatically affected the speed at which millennials live their lives and then live their lives, and left unprepared for financial emergencies. In a broad view, the graduation that is supposed to be a fun day has become something else; many students have had their diplomas or degrees attached to hefty loans (Beal et al. 72). Therefore, the issue of students` debts during the college years should be approached by advanced model and theories. Fortunately, studies have revealed many strategies that can be applied to solve this gap; hence, how the implementation methods can be employed is the primary question of concern. The following sections explore spectra of financial decisions being made during college years.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

College Debt

Studies reveal that more millennials 49 per cent of have student loan debt more than any other racial subgroups. Generally, the great student loan debate is perhaps one of the most contentious in many countries across the world (Beal et al. 72). The primary issue of concern is why the student plunging into graduations associated with enormous debt, both in terms of student loans, as well as credit cards, cars loans, and other debts obligated during the college years (Boatman et al. n.p). Why do students have to consider borrowing money through students' loans as the only strategy to pay for college fees and other related expenditure? The reasons for acquiring students` loans in colleges depends on the specific requirement that varies from student to student. Many of the students seek student's loans to finance their postsecondary education. Therefore for the graduates and their families, the student's loans provide funding that has attracted college education (Lochner et al. 433). A section of college students also considers seeking student's loans for luxuries. For instance, some of them would use the credit to buy cars, comfortable hostels. Other expenses include transportation expenses. While students loans providers tend to constrain student to use the loan of academically oriented spectra, a section of the students has deviated to even unnecessary or somewhat irrelevant expenditures such as clubbing and even non-academic tours.

Future Impact of College Debt Accumulation

In a broad spectrum, the benefits of post-secondary education outweigh the cost of the same training. Studies reveal that college earnings premium has grown steadily over the past several decades. The new trend has seen above $30, 000 of debt that borrowers accumulate average for the degree. Generally, higher education is an excellent invest time, and thus many people students who can borrow has successfully paid. However, there are also concerns, on the impacts and consequences, of debt acquired during students` college years (Baker et al. 133). A review of available literature on the consequences of student loan debt indicates that student loan debt, tend to result in negative impacts on people`s lives after colleges or universities. More specific, the consequences could have negative impacts on broad spectra such as career choices, home ownership, health, finance, retirement, and even in relationships such as marriages. These studies have specific interests in the decision made by graduates and also those who will fail to graduate. Now, researches reveal that student loan debts discourage entrepreneurship, restricts career choices thus leading to job satisfaction. However, there was no consensus on whether it affects an individual's earnings.

Additionally, some of the people with student loan debt tend to have lower levels of net worth. They also experience more financial distress and have lower savings, pensions and retirement funds- this could be specific to those who did not complete their degree (Baker et al. 133). On the other hand, it is not apparent to establish that the student loan debt has the potential to affect the decision to seek postgraduate courses. Generally, while student's loans have great merits, the associated consequences of student loan debt accumulation on an individual's life tend to be very adverse. However, this would fundamentally depend on the strategies outlined by concerned individuals.

Graduating from College with Minimal Debt

Given the fact that many graduates carry more than $30, 000 in student loan debt doesn't mean that current and future students should also expose themselves to the same trend. There are several ways to limit or reduce loan balance before graduation (Webber and Douglas. n.p). The reasons for seeking student loans during the college year may be unavoidable. However, the amount of credit can be significantly limited before graduation following some of the critical strategies that we are going to discuss in this section. Now, for graduates to avoid debts and problems that are linked to them, there are two main factors to be considered here; either increasing financial sources apart from students` loan, or reducing the cost of expenditure of the acquired loans. Below are the major theories of graduating from a college with minimal debts or even graduating without debt.

If a student has a longer timeline with he or she can work with, starting to save if the best recommendation. This theory is prompted by the fact that, even though parents believe that children will attend college and benefit from education, not all of them will directly benefit. Many graduates seeking jobs will be distressed due to limited employment opportunities. Therefore, saving will help the student to pay back the loan immediately after graduation. The graduate can use the savings and open business in which they can make profits and pay back the loans. Conservation is therefore significant in intervening the status of students` loan debt before graduating. A student that saves well can clear all the debts even before graduation. Another essential step is opting for a cheaper college. The lower the cost, the lower the financial burden. So a student can do research and find out more competitive colleges, that they can afford to pay will small loans or no loan at all. Strategising spending strategies is also another significant spectrum. For instance, a student can think of spending the investment in a model that considers four years (Phillips et al. 252) This can help the students have a perfect expenditure and saving plans that would help them pay back the loan in 4 years, before graduation. Borrowing wisely is also very important on many occasions. For instance, students should utilise federal loans before they fall back on to other kinds of loans. Private loans tend to have higher rates as compared to federal loans.

Seeking for financial aid such as grant could also be another perfect way to go. Donations don't need to be paid back, and this could limit the loan to be borrowed or expenditure of such loans. Acceleration of the graduation period is another perfect idea. Students should take their course works seriously to avoid prolonged graduations. They could also consider programs such as tri-semester to accelerate the period of graduation (Phillips et al. 252). They can also find colleges with an expedited period of graduation. However, the quality of education provision is still vital. Students can also consider paying tuition fees in instalments rather than seeking for loans to pay once. Again, to further reduce the expenses, students can embrace work-study programs in colleges to earn them some tokens. Cutting on living expenses is also very critical, and this thus calls for the proper expenditure of students` loans. For instances, student loans should not be bestowed on costs such as buying cars, entertainment devices such as televisions etc.

Managing Credit Card Debt

Credit card use can help or hurt an individual`s finances, and this can escalate to the nation`s economy. Credit card as potentially risky, especially for new credit users who may fall into several unforeseen traps in the name of 'free' money. Studies reveal that credit card owner tends to spend more than they are paying with the credit cards than when they pay cash. Therefore, there is a definite temptation to overspend (Dellande et al. 2632). Another demerit of credit card loans is that the interests make it difficult to pay off the balance. Using card cards also are linked to higher chances of getting in debt. Customers also risk ruining their credit scores. With credit card loans, it is usually harder to track expenses across several credit cards. There are too few instances of credit card fraud that may affect the customers. Generally, customers should be extra keen while seeking credit card loans. Now to prevent credit card debts, an individual must set out strategies that would govern all the expenditures and saving. This would eliminate the case of temptation to overspend. One should also pay the balances in full to avoid the risk of debts and effects on the credit score. One should also read and understand all credit card terms and conditions (Dellande et al. 2632). Again, extensive research should be done to avoid the case of credit card fraud that can affect one's financial security.

Health and Life Insurance

Today, health and life insurance are very significant in financial planning. There are increasing inflation and changes in lifestyle that are bound to affect our business plans. In a real sense, health and life insurance if taking to oneself or family from unforeseen circumstances, it can also help in wealth accumulation, preservation and pave ways for liquidity at the right time, this is when it is added as a spectrum of financial planning. While many of us still don't know exactly where to invest in, life insurance is a good investment far (Shorrocks et al. 139). It is relatively more straightforward, cheap and most significantly caters to different stages of an individual`s life circle. Generally, health and life insurance will help in cases of emergency but can as well serve as a better investment in financial planning.

Applications

Financial management is a complex but significant part of the life cycle. If we can make brilliant financial decisions, then we can prosper in life. For instance, managing college debts are substantial. It saves graduate from the fiscal constraint that could be experienced after graduation. With or without employment, graduate without student loan debt will tend to transfer their little monies to invest in businesses. Managing credit card debt is equally significant. Given the demerits of credit card loans we explored above, if one prevents or leads will, the credit card loan debts, then they can quickly develop a financial decision-making scheme that is more effectual. The weight of health and life insurance cannot be downplayed either. They are critical in economic models since they help in cases of emergency as well as forming a component of investments. Proper financial decision making is essential for future planning.

References

Baker, Dominique J., and William R. Doyle. "Impact of community college student debt levels on credit accumulation." The ANNALS of the American Academy of Political and Social Science 671.1 (2017): 132-153.

Beal, Diana J., and Sarath B. Delpachitra. "Financial literacy among Australian university students." Economic Papers: A journal of applied economics and policy 22.1 (2003): 65-78.Boatman, Angela, Brent J. Evans, and Adela...