How can I build credit as an international student?

As an international student, it may be useful to think about building credit while attending college in the U.S. Building a credit history of on-time payments is a necessity for living in the U.S., including securing housing and utility services. Most of the transactions that happen in daily life are paid by credit or debit cards instead of cash. A good credit history can benefit you through lower interest rates on personal or mortgage loans and even lower security deposits when you rent an apartment. Here are some steps you can go through to start building your credit history.

Step 1: Find an on-campus job to get a SSN

SSN stands for Social Security Number. It’s a national identification number for taxation and other purposes issued by the Social Security Administration. As an international student, you probably would not allowed to work off-campus due to the F1 visa status. However, you can find an on-campus job and work 20 hours or less on a weekly basis.

Step 2: Apply for credit cards

It may not be easy at the beginning to get a card that fit your needs. Credit cards have different perks or advantages. For example, some feature balance transfers, low interest rates, rewards/cash back, or airline points.

You can always apply for secured credit cards even if you don’t have a SSN. These cards are backed with a deposit account as collateral. The deposit is likely to be 100% to 200% of the amount of the credit you want to get. However, keep in mind, different banks have different policies on credit card issuance and not all banks offer secured credit card. Therefore, do your research before applying for any credit cards or ask a banker in your local banks for any available offers.

Step 3: Manage your credit history

Use your credit wisely and make sure to pay off the balance on time. The University of Illinois Extension has great resources on how to manage your credit history on its website. These materials will give you a better understanding of credit history and how to manage it wisely. Peer educators with the Financial Wellness for College Students program also have office hours, and you are more than welcome to make an appointment with a peer educator to discuss credit cards.

Written by: Zige He, Financial Wellness Peer Educator, and Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension

Navigating Life’s Financial Transitions (Recorded Webinar)

Whether it is going to college, moving, dating or getting a new job, all of these major life changes can cause periods of financial transition. How you deal with these transitions can seriously impact your finances in the long run. Do you have the necessary tools to manage life’s financial transitions?

University of Illinois Extension, along with the University of Illinois’ Student Money Management Center, hosted the webinar “Life Transitions” on January 27, 2015. The FREE webinar focused on resources for making major financial decisions at various points throughout your life and the tools necessary to stay on track towards your goals. Watch it below!

Spending badgeThis is a Spending Badge eligible program, so make sure to take the quiz after watching to get credit!

“Life Transitions” is part of the Get $avvy: Grow Your Green Stuff webinar series.

 

Written by Andrea Pellegrini, University of Illinois USFSCO Student Money Management Center

Choosing a Financial Professional

Managing money is not an innate skill and often it makes sense to turn to expert help. Whether you’re looking for help with your taxes, choosing investments for your retirement savings, or managing multiple saving goals, financial professionals can help you explore alternatives and strategies to best manage your finances.

However, choosing a financial professional is a scary proposition for many people. It can be hard to decide who you want to trust with your money and your future dreams. Unfortunately, government regulations do not protect the consumer very well in this area. Anyone can call themselves a financial adviser. Taking a little time to investigate financial professionals before you begin working with someone will allow you to make an informed decision.

First, think about what services do you need. This will help you identify a financial professional who has experience and education that matches your need. For example, if you are 24-years-old and are looking for investment advice, then you may not want to choose someone who specializes in estate planning for 80-year-olds. Or, if you need advice about filing taxes for your small business, then you need someone with tax expertise.

Are you puzzled by all the initials following financial professionals’ names? University of Illinois Extension’s website, Choosing a Financial Professional, includes a Guide to Financial Credentials. This in-depth table lists many financial credentials and information such as the education required to receive the credential. You may want to start your research into financial professionals here.

At this website there are also links to several online searches that can connect you with financial professionals in your community. You may also want to ask friends or other acquaintances for suggestions of financial professionals.

However, no matter who refers you to a financial professional, take the time to interview two or three people to find one that is a good match for you. Ask specific questions such as how much and what type of continuing education does the person you’re interviewing engage in on a regular basis? The financial world, and related laws and products, change at a rapid pace; continuing education is essential. How is the financial professional paid? Is the financial professional’s income fee-based or commission-based? You have the right to know how much financial services will cost and how they will be calculated. At the Choosing a Financial Professional website you can download a free Interview Guide to help you think of questions to ask.

Even if someone is the perfect match for your Uncle Fred, it doesn’t mean that they are the right financial professional for you. Be sure you’re comfortable asking questions and talking to the financial professional. You want someone who can explain things in a way that makes sense to you.

One last, but important, step: Once you narrow your choices, check the financial professional’s background and references. In Illinois, check a person’s licenses and disciplinary records by calling the Illinois Securities Department, toll-free 1-800-628-7937. If someone is helping you buy or sell investments, you do want to be sure that they are licensed to do so in Illinois.

If you have more questions about choosing a financial professional or other financial matters, please visit our Plan Well, Retire Well blog, or contact us at FinancialWellnessUIE@gmail.com or call (217) 333-7672 for more information.

Written by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension

Spotlight on Library Resources: Spending

CliffsNotes Graduation Debt [electronic resource]: How to Manage Student Loans and Live Your Life by Reyna Gobel

CliffsNotes Graduation Debt: How to Manage Student Loans and Live Your Life is a guidebook for managing a significant debt load after college, yet the author takes a positive approach to personal finance, emphasizing frugality and spending money wisely in order to still live well while paying off debt. It is possible to take vacations and have extra spending money even while repaying loans! The book even ends with sections on Eating Out, Moving into a Nicer Place, and “Earning” a New Car.

The focus of this ebook is not exclusively spending. However, as it does take a positive approach to personal finance and gives serious attention to spending as a part of living your life, this book can be read at least in part as a manual on budgeting and spending wisely. Chapter 5, “Budgeting for Your Lifestyle and Your Loans,” and chapter 9, “Budgeting During Inflation,” contain practical advice about spending and budgeting, including such tips as keeping a financial diary and choosing budgetary cutbacks. The book even provides, in a sense, “financial self-help” throughout by, for example, reminding the reader not to dwell on past financial mistakes but instead problem-solve when mistakes or overspending are discovered.

The ebook is divided up into many small subsections making it easy to read. In typical CliffsNotes-style, the book is effectively a “cheat sheet” for personal finance, making the topic accessible to readers least inclined to seek out resources on personal finance otherwise. The rewards it promises, too, are enough to make this resource enticing to any new grad knee-deep in debt!

Note: this ebook can only be accessed on campus or off campus with your University of Illinois at Urbana-Champaign net ID. If you do not have access to this ebook, please request a print copy through your local public library.

Written by Heidi Johnson, University of Illinois Library

What are common tax mistakes made by college students?

One of the most common mistakes made by college students is that they think they are not required to file their income taxes–some students don’t even know if they have to file or not. The answer to this question is based on the word “income.” The student has to ask him or herself if they have earned any income. If the student is a single dependent and the total earned income for the year was less than $6,100, the student is not required to file their taxes. That doesn’t mean the student shouldn’t file; it just means they don’t have to. The reason why the student should probably file, even if their income falls under $6,100, is because they may get back all or some of the money that was withheld (IRS.gov covers this in more detail). If the student does file, it’s important to avoid mistakes. Mistakes slow down refunds and draw attention to you with the IRS.

Another common mistake is claiming the wrong dependent status. If the student’s parents are already claiming him/her as a dependent then the student should not make the mistake of claiming themselves as a dependent.

Also, many students miss out on education deductions. Whoever pays the student’s tuition (including themselves) can claim certain education-related deductions including those for tuition and fees.

Lastly, some students fail to account for dual state income. If you live in one state, attend school in another, and work in both, you will have to account for the income (and taxes paid) from both states. For example, a student may live in Wisconsin but attend college at the University of Illinois at Urbana-Champaign. Since she is a resident of Wisconsin, she will have to claim all of her income there, including the income from Illinois. However, she will get a credit for taxes paid on income in Illinois.

Written by Cindy Garcia, Financial Wellness Peer Educator, University of Illinois Extension