Welcome to Delgado Community College's Financial Literacy Program. The program was launched as an initiative of the Office of Student Financial Assistance to educate students on the importance of money management practices.
What is Financial Literacy?
Financial Literacy is the knowledge gained to implement the most effective and successful money management practices. Financial literacy is vital for an individuals' professional and personal growth.
Our key goal is to provide students with the information and tools to be financially literate and successful. We will provide information and tools on the following financial literacy topics:
- Credit and Credit Cards
- Personal Finance and Debt Management
- Loan Management and Student Loan Consolidation
What are budgets and why should I have one?
A budget is a record of an individual's income and expenses that will guide the individual to be financially successful. A budget can be as simple as writing down basic monthly income and expense amounts on a piece of paper or creating a detailed worksheet with information for each day of the week. A budget can help individuals reach a variety of financial goals such as saving for a car or encourage an individual to spend less money on clothes or eating out.
Guidelines for Creating a Budget
- Track your expenses for a month so you know exactly where you are spending your money
- Evaluate your income vs. expenses
- Classify your expenses into wants and needs
- Determine if the expenses in the 'want' category can be reduced
- Create your budget for a week or month and stick to this budget
- Write down your short-term and long-term financial goals, so that while you are following your budget you know what goals you are trying to achieve
- Use the sample budget worksheet [PDF] to help you get started
Credit and Credit Cards
What is Credit?
Credit is your reputation as a borrower. It tells others how likely you are to repay your debts. Credit is made up from information about your borrowing history. Most of the information comes from your credit reports.
What is a Credit Report?
A credit report contains information about your borrowing history. Lenders provide information that ends up on credit reports. How much you borrow, your repayment history and other details about your borrowing behavior are on your credit report. When someone wants a credit report, it is requested from a credit reporting company. These agencies collect and distribute all of your information.
What is a Credit Score?
Credit agencies use your credit history to determine a credit score. These scores are determined by a computer program that runs through your credit report. It looks for patterns (such as on time payments), characteristics and any red flags that may need to be tended to. Credit scores are used for multiple areas in your life such as lending decisions for cars or mortgages, insurance and even employment approvals.
Why Do I Need to Build Credit?
If you do not have a credit history, lenders do not know if they should lend you money. It is not able to be determined if you are a responsible debt-payer or a bad risk. You need to build credit in order to prove your creditworthiness. Young adults who are just starting to learn about financial responsibilities need to build credit. However, remember that credit can be a useful tool but it can also get you into trouble. After you begin building credit you may be inundated with tempting new credit offers. Banks, credit card companies and others will want to loan to you as you are a good borrower. Don't take every offer only borrow money when it is truly beneficial to you.
How Do I Monitor My Credit?
After you build credit, you must monitor it. The US Government requires that the credit bureaus provide an annual free credit report to you and you should take advantage of this right by visiting annualcreditreport.com.
Basic Guidelines for Credit Card Use
- Getting your first credit card is a big step and one that affects your future. A credit card is serious. Credit card companies are lending you money and you have responsibilities.
- One card is most likely enough. Avoid the temptation of having more than one card.
- Keep the balance as low as possible. Pay off your balance each month of possible. If that is not possible, pay as much as you can over the minimum payment each month. Use the card for emergencies and keep cash and checks for everyday purchases.
- Create a spending and budget plan. Do not let credit card payments exceed 20% of your monthly income.
- If having a credit card turns into a problem, stop using it for a while until it is back under control.
Additional Credit Resources
Personal Finance and Debt Management
What is Personal Finance?
Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save and spend monetary resources over time, taking into account various financial risks and future life events. Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and income tax management. The key component of personal finance is financial planning, which is a dynamic process that requires regular monitoring and reevaluation.
In general, it has five steps:
- Assessment - One's personal finance situation can be assessed by compiling simplified versions of financial balance sheets and income statements.
- Setting goals - Goal-setting is done with an objective to meet certain financial requirements.
- Creating a plan - The financial plan details how to accomplish goals. It could include, for example, reducing unnecessary expenses, increasing one's employment income, or investing in the stock market.
- Execution - Execution of one's personal financial plan often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.
- Monitoring and reassessment - As time passes, one's personal financial plan must be monitored for possible reevaluation and/or adjustments.
Basic Rules to Budgeting and Money Management
- Assess your financial situation. Determine your living expenses, periodic expenses and monthly debt payments you owe. Compare your expenses to your monthly net income. Be aware of your total debt.
- Develop a realistic plan. Create a worksheet to document your monthly expenses. Record where and what you are spending money on. These expenses could be fixed (housing, utilities, child care, student loan payments, etc.) or flexible expenses which vary from week to week or month to month (unexpected emergencies, medical and prescription bill, eating out, etc.) Once you know what you're spending money on, you have the ability to take control of your finances by creating a budget.
- Determine the difference between needs and wants. Create a sound budget by taking care of your needs first (food, housing, clothing, transportation). Money should be spent on wants only after needs have been met.
- Don't allow expenses to exceed your income. Make adjustments in your budget when you are close to over spending. Take your lunch for the week instead of eating out. Evaluate the importance of expensive luxuries such as cell phones, cable TV, and designer clothes.
- Pay bills on time. Maintaining a good credit rating and avoid late charges. If you are unable to pay your creditors, call, explain your situation and set up a payment agreement.
- Use credit wisely. Determine what you can comfortably afford to purchase on credit by reviewing your budget. Don't allow your credit payment to exceed 20% of your monthly paycheck. Pay more than the minimum on charge accounts. Add a few extra dollars to your payment. Avoid borrowing from one creditor to pay off another. Make a conscious effort to use paper (actual dollars available) not plastic (credit cards).
Additional Budgeting Resources
Loan Management and Student Loan Consolidation
Your student loans are a serious financial obligation that must be repaid. In addition, to the amount that you borrow (the principal); you will also be charged interest for the use of the loan funds.
There are several resources to assist you in your loan management endeavor.
Student Loan History
If you need to determine how much you have borrowed in total you should visit the National Student Loan Data System (NSLDS). NSLDS lists the federal student loans (Stafford, Perkins, Parent PLUS and Graduate PLUS) you have borrowed as a student. You can view the type of loan, amount borrowed, accumulated interest, lender and servicer information. If you borrowed alternative loans, you must contact your lender for information about your loan.
The Repaying Student Loans Quick Reference Guide [PDF] – includes the student loan interest deduction, consolidation loans, repayment plans, income-based repayment, public service loan forgiveness, dealing with financial difficulty, default, deferments and forbearances, loan rehabilitation, budgeting tips and loan cancellation.
Student Loan Consolidation
A consolidated loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments.
Resolving Loan Disputes
The Federal Student Aid Ombudsman Group is available to help resolve disputes with federal student loans.
The Project on Student Debt
The Project on Student Debt works to increase public understanding of borrowing for higher education and the implications for families, the economy and society. Recognizing that loans play a critical role in making college possible, the Project’s goal is to identify cost-effective solutions that expand educational opportunity, protect family financial security, and advance economic competitiveness. Learn more about the Project On Student Debt.