What do college students need to know when purchasing car insurance?

Starting a college life is an exciting experience with a lot of changes. There are many expenses along with these changes. One of the most expensive costs is car insurance. Car insurance is an ongoing cost, with a fixed payment monthly. For most college students, money is short and they need to manage their budget efficiently. To have cost-efficient car insurance, it is important to understand the five key factors influencing car insurance rates.

Location: The insurance rates vary widely by zip code. Residents living in rural area will have lower rates, while those who living in urban area will be charged with higher rates. The principle is simple. In urban areas and cities, there are more cars on the road. For insurers, more cars on the road equals a higher potential for accidents.

What you drive: There are three types of vehicles with high car insurance rates, sports cars, luxury cars, and large vehicles. Sports cars and luxury cars usually have high market value and carry pricey repairing costs. Large vehicles are exposed to more damages due to their big size. Therefore, insurers charge higher premiums on these three types of vehicles.

Credit History: Insurance companies will look at your credit history to determine the insurance premium. If you have a good credit standing, you will have a great saving in premium costs; otherwise, you are going to pay more.

Driving Mileage: If you do not drive too often and your car has low mileage, you can expect a low car insurance rate. The insurers think that more miles represent the higher possibilities of getting into an accident.

Driving Record: Insurance companies will be cautious of drivers who cause accidents. These drivers generally pay more than those who are crash-free. Good driving habits actually can help you lower insurance costs.

I hope the discussion of the five factors above can help you feel more confident in dealing with car insurance. Just a reminder, when you purchase car insurance, please do not forget to compare different insurers to find the one that best fits your needs.

Written by: Xiaotong Tao, Financial Wellness Peer Educator, University of Illinois Extension, 2018.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

Why is building good credit important?

Building good credit is important especially if you want to finance any large purchases like your home, car, education, etc. Maintaining good credit will show creditors or lenders, whom you are borrowing money from, that you are responsible and have the ability to pay back the money that you borrow in a timely fashion. Creditors use your credit history to determine how much interest that you would have to pay on a loan. If you are considered to have good credit, you are more likely to get a lower interest rate because you are of less risk of not being able to pay back the money that you owe.

Some employers also check your credit score before hiring. An employer that is checking for credit scores during the hiring process might be looking for someone that is responsible and reliable. If you are not responsible and reliable with your money, how would you fare in a workplace where your coworkers and company will rely on you.

Maintaining good credit will show that you are financially responsible and on the right track. The economy runs on credit and if you need to borrow money, you must maintain a good credit history.

Written by: Tony Li, Financial Wellness Peer Educator, University of Illinois Extension, 2018.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

What happens when you cut out your daily milktea or fancy coffee drink?

Milktea drinks taste so good. Just thinking about the creamy milk, the refreshing tea flavor and the chewy Bobas might have already made you want to grab a cup. Or, perhaps it’s the aroma of coffee that tempts you!

However, have you ever thought about how much the daily store-bought drink costs you? Let’s do the math quickly. Let’s say one drink costs $4.50, and you buy it five times a week. Then the total adds up to $90 per month and $1080 a year. I mean $1080 a year! That gives you more than enough money to purchase a great smartphone!

What if you don’t drink milktea or coffee? Well, these drinks are just an example that shows you how small amounts add up. The most important thing is to identify what the small expenses are that suck your money when you are not paying attention. Similar things can be sweets, late night meals, water from vending machines, etc. Once you identify the small amounts that you spend, add up their total costs for the year. Is it worth it?

For more examples of how small amounts add up, view Small Changes Add Up on our website.


Written by: Linxi Liu, Financial Wellness Peer Educator, University of Illinois Extension, 2017

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.