Contributed by Credit Bureau (Singapore)
Congratulations! You’ve finally graduated and made it! Whether you’re looking for a grand getaway or a frugal backpacking trip for a celebration, advanced financial planning can help lessen the anxiety associated with holiday costs. A financial plan for your trip is just as important as planning the rest of the itinerary. Here’s some useful steps that you can take to make your graduation trip the best time of your life.
1. Make a Battle Plan
Start with looking at exactly how much you need. Write down all of your expenses and savings. Then determine how much money you can set aside to spend for your trip. Look ahead to what you will consider purchasing, from souvenirs for loved ones to food and travel tours – it is important to consider all your potential purchases. Next, if you have bad debt or old debt, focus on paying down the debt that has the highest interest rate and make paying it off a priority.
- Order your debts from highest interest rate to the lowest interest rate
- Use any extra cash you have available to pay off more of your debt with the highest interest rate
Following the logic above, if you have a $800 credit card debt with a 24 percent interest rate, you should tackle that before your $10,000 student loan with a 4 percent interest rate. This strategy minimizes the amount of interest you're paying overall, which can save you thousands over time, depending on the level of debt you have.
2. Work on your Credit Score
Having a good credit score will be very important in the future. Improving a credit score takes time, so it is best to start as early as you can. Paying your bills on time, keeping your debt down, and using credit cards wisely are all important steps that you can take right away.
Your credit score is guaranteed to influence the cost of the big ticket items you have to prepare for such as taking out a mortgage, planning a wedding, qualifying for a car loan and building up for retirement. Improving your credit score should be a priority. The higher your score, the more likely lenders will want you to borrow money from them or issue loans to you.
3. Protect your credit back home when overseas
Do not get carried away preparing for your trip abroad that you overlook to add ways to protect your credit to your list. With the fraudulent use of identity cards and credit cards occurring with widespread internet usage of information being exchanged and transacted on a daily basis all around the world, it is important to monitor your credit to prevent the potential likelihood of identity theft occurring. Check out CBS’ credit monitoring services to notify you against identity theft when overseas.
The earlier you catch an activity by an identity thief or fraudster who has stolen your personal information and used it to take out a loan or open up a credit card in your name, the easier it will be to restore your identity and financial life.
While it’s true that advanced financial planning can improve your overall situation, it does more than that; it teaches you that you have the power to take control and change your financial future.