Young people dream of fancy vacations, designer clothes and cool apartments once they land up into their hefty paying ‘first’ jobs. But if they have to pay, or are made to pay back their student loan from their own salary, there’s opportunity to teach them the most important lessons of their life.
Once youngsters reach a stage of enjoying the fruits of the hardwork that they put in all their student life, the success usually goes into their head and they start spending without thinking anything about their financial future.
But when these young, high flying and highly paid graduates have to prioritize paying back their education loan, they begin thinking logically about managing their expenses. They do not spend everything on fancy items and day to day expenses, but also think about saving for future EMIs, in case they land jobless in the near future. When this ‘saved’ money has to be retained, they begin looking around for avenues for investing this saved money. This gives them an understanding about the world of financial education pretty early in life, which they would use for wealth creation in future.
They understand that it is important to segregate expenses into top priority, middle-level priority or luxury. Their thinking about present and future priority expenses becomes clearer and they begin valuing money more - a habit which pays back highly in future. Next, they begin accommodating others’ requirements and would most likely, contribute to house expenses too. They begin quantifying what living really costs and cease making unnecessary demands from others. Young adults who opt for repaying their debt on their own have a firm grip on their financial life and can manage overall finances well in future. Also, they are most likely to use their credit cards much more wisely than those who do not undertake repaying their debt on their own. Repaying credit card dues spells such huge responsibility on young shoulders and if managed wisely, they have leant a lesson of their life.
Managing debt on their own at an early age makes them look at the bigger picture. Learning the terms and conditions of the loan gives them an additional exposure to how the financial world works. Usually, youngsters have no idea about where their money is going. Having a debt to be repaid, youngsters create a budget and are most likely to inculcate the habit of being regular about tracking their expenses.
Considering these factors, it is best advised that students should take the responsibility of repaying their debt on their own. In case they cannot take it fully, they should contribute atleast a fixed percentage of the EMI. Learning to manage money at a young age helps massively in wealth creation throughout one’s life. #gettingyourich