Knowing how to avoid building up debt when you’re a student is a key life skill that we should all master. In the current economic climate, debt seems to be inevitable, particularly for Sri Lankan millennials’ who are trying to get an education, make ends meet, and start a life for themselves. Sticking to a budget, repaying loans, keeping good credit scores, spending wisely and concentrating on your financial goals will help you use your money for the things that are most important to you without taking on the pressure of debt. In this article, we take a look at three useful tips to help you avoid building up debt.
In this article
- How to avoid building up debt as a student
- Why do Sri Lankan students seem to get in debt?
- How to avoid building up debt as a student
- How to avoid or limit credit cards
- Create an emergency finance fund
- Manage your budget strategically
- Paying back loans on time
“Happiness is being debt free”
Why do Sri Lankan students seem to get in debt?
Unfortunately, building up debt as a student in Sri Lanka is near impossible. Let’s face it, a good education costs a lot here and we all know that there are a ton of education providers out there doing their best to take our money and leave us in debt. If you’re one of the many people out there trying to fund your own education, you need to be savvy with your spending and manage your finances properly. The good news is that with careful saving and good money habits, we can avoid building up huge debts while working on developing our education and careers. So, what do you think are the top things Sri Lankan students build up debt on? Let’s take a look;
- College Courses & University Fees
- Accommodation
- Transport
- Laptops, Phone Bills & Technology
- Food, Drink (Alcohol) and Entertainment
In reality and given the massive list of daily expenses, it’s nearly impossible to avoid debt but follow these steps and hopefully your student days won’t leave you hung out financially dry.
Be careful with credit cards and don’t spend more than you can afford to repay
You may think it’s a smart idea to have an emergency credit card or to use one to boost your credit rating, and while all of these are well and good, the fact is that credit cards are rarely used for these reasons, and there’s always a temptation to spend when you have access to a credit card. The goal of most credit card companies is to get people into debt through minimum payments and compound interest. If you have already accrued some debt, try to keep your credit cards paid off as much as possible to avoid further debt. Always making repayments on time will help you build up a good credit rating so as a golden rule, never use more than you can repay.
Create an emergency fund to avoid debt
Since it is possible to fall into debt because of unexpected expenses, creating an emergency savings fund is a smart idea. Set aside some cash every month, and don’t touch it until you really need it; once you’ve built up expenses worth six months, you’ll have a flexible barrier to shield you from items like medical bills, car repairs, breakdowns, and other unpredictable expenses that would otherwise threaten your financial future.
Manage your budget strategically to avoid debt
Staying out of debt begins with realizing how much you can and can’t spend. The foundation is a practical budget. Take into account anything you spend money on, such as movie tickets, fees for loans and groceries. If you do not realize how much money you have going in and coming out, you can’t make a game plan or stay on track. You will have a clear baseline for financial decision-making if you have that. Spend within your goals and targets when managing your budget and cut expenses elsewhere to avoid debt. This strategy will also free up more money for your future goals such as saving to buy a car or home.
About Loanme
Loanme.lk connects Sri Lankan students with online loans. Using the latest financial technology, our systems can assess your loan eligibility and if approved, release funds to you within 48 hours. Find out more about our online loan application.
