Anum Yoon is a millennial money expert and the founder of Current on Currency. We had a chance to speak with Anum about the financial challenges associated with being an international student, and learned a few tips on how millennials can make smart money decisions.
Tell us a little bit about yourself. Why did you decide to start a personal finance blog?
Growing up, I traveled constantly and doing currency conversions in my head became second nature to me. I noticed money worked differently for different cultures, and it was fascinating to take note of the differences.
I was born in Seoul, South Korea, but grew up in Hong Kong. For high school, I got shipped off to a small boarding school in the Himalayas, and after graduation I chose to continue my education in America.
You can imagine my culture shock upon moving to the U.S. after having lived in India because of the difference in the cost of living. But even after I got used to living in the States, I kept running into questions and problems due to my status as an international student. That’s when I decided to start my own blog to help out others. I wanted to start a personal finance blog that was relatable despite differences in culture, standard of living, and rate of currency.
What additional challenges do international students face in America when it comes to personal finance?
International students have to pay higher tuition than even out-of-state students with little to no chance of getting financial aid. That alone makes finances difficult for a lot of them, not to mention the fact that they don’t have any credit built up. International students also can’t hold any jobs (apart from campus jobs). You could get deported for working anywhere else; working as a private tutor, server, delivery person, or anything else – it’s all completely illegal.
When I graduated and decided to stay in the U.S. for work, I couldn’t get an apartment lease without an American co-signer due to my non-existent credit history. It’s also incredibly costly to fly back home to be with family during holidays (especially the shorter ones like Thanksgiving and Spring Break). So it was a hassle to find a place to stay during breaks.
Even though you learned how to stick to a budget in boarding school, you still spent a lot of money in your first year of college – so does that imply that personal finance knowledge doesn’t necessarily lead to maintaining good financial habits?
The only reason I was able to keep a tight rein on spending in boarding school was because it was mandatory. They gave every student the same exact amount of money every month and we just had to deal with it, no questions asked. I had no real authority over my allowance, so when I suddenly had full control over my spending, I blew it all. I think you need to do your own research and cultivate your own financial knowledge if you want to maintain a healthy relationship with your money.
What’s the biggest financial mistake the millennials make that is easily avoidable?
Living beyond your means. This isn’t just a millennial issue, by the way – most Americans have a very low savings rate and buy more stuff than they need. It’s so easy to think that it’s ok to click that “buy now” button and eat out three times a week because it looks like everyone else is doing it, but you really need to be mindful and honest about your spending.
To keep from overspending, I recommend focusing on experiences instead of stuff. If you like to eat, learn to cook and mix drinks at home and invite your friends for a weekly dinner – it’s a lot cheaper than a restaurant! If you love to travel, hit the road and check out Airbnb or hostels to make it affordable. There are lots of creative ways to love your life without overspending.
Do you have any advice for a college student who has just received his or her first credit card?
Pay it off in full and on time every month – no excuses! If you do so, you’ll build your credit score and have access to great loan rates in the future. A credit card can be a valuable tool and (in a pinch) helpful in emergencies, but it’s definitely not a ticket for free stuff. Use it for gas and groceries that you know you can afford, but skip the mall if you’re a shopaholic.
For someone who graduates from college with a massive student loan debt, how would you suggest they approach that issue? Is there anything that they should not do?
First of all, I really feel for them. You just can’t get ahead these days without a college education, but starting out in life with $37,000 in debt can be crippling. But it’s important to be smart about how you pay. If you’re thinking about refinancing, it really only makes sense to do it for a lower interest rate than you’re currently paying. Anything else means you’ll be paying more in the long run, even if your monthly payments are a little lower.
I would definitely not ignore the problem. You can’t skip out on your debts and expect to ever be able to borrow money in the future for a home or car. If you need help making your payments, research your options for loan forgiveness or deferment before you miss any payments.
Once a young adult gets established financially, what financial priorities should he or she focus on more than in the past?
The minute you have a job – any job! – you should be saving 10 percent off the top in a 401(k) or in your own IRA. That actually needs to come first, before you hit any other financial benchmarks. Your budgeting for everything else starts after that money is set aside.
As for the next order of business, I think saving for a house is crucial. The more you have to offer for a down payment, the better rate you’ll get on your mortgage. If you already own a house, accelerating your payments to boost your equity will get you to a point where you can open a home equity line of credit to use as your emergency cushion 9if you need it). Homeownership opens a lot of doors for financial security, so it’s huge.