Managing Employment Income

Financial Literacy
Student’s Name
Institutional Affiliation
Financial Literacy
There is an increasing need for knowledge on the management of employment income. It is almost sure that a significant fraction of fresh graduates enters the job market with financial burdens that come in the form of student loan. While the joy of finally getting employed is profoundly genuine, the feeling has often overshadowed the critical issues that matter. Thus, financial literacy has become vital since it has a direct influence on what people win as a consideration in their employment. For instance, the debts have control over the decision by an individual to accept a certain level of compensation for a job offer. Indeed, student loans have both positive and negative impacts that can either be long-term or short-term.
Effect of Student's Loan on Credit Score
Various critiques have viewed student loans as a significant source of financial distress to many. However, it is critical to do a comprehensive assessment of how its ripple effect is felt and the specific consequence on an individual's credit score. Financial institutions consider various factors when deciding to offer a credit facility to applicants. For instance, Ipek-Erdogan (2019) asserts that loaners take people through a financial literacy exercise to educate them on the different determinants of their creditworthiness. These determinants mainly take the form of budget and spending goals.
According to Bems and Di Giovanni (2016), individual budgets are ideally guided by a person's marginal propensity to spend. Further, the listing of the item of budget items is based on a particular order of preference because of limited resources. Therefore, an incurred student loan may top the preference list due to pressure from loaners who always want all loans repaid as soon as a person gets a job or graduates. Thus, this loan reduces one's ability to include other items in the budget.
On the same note, it becomes a determinant of people's spending patterns. For example, a loan burden limits people from investing since their marginal propensity to save is jeopardized. Given the future budget and spending habits, this loan reduces an individual's credit score. Banks are lacking the certainty of student loan beneficiaries' ability to make new financial commitments when existing loans already burden them. On numerous occasions, people are unable to contribute to their retirement plans. There is the proposition that the loan levels could rise and increase the size of a financially burdened and distressed generation (Bynoe & Di Liberto, 2017).
How Student Loan Management Contributes to Personal Financial Growth and Success
Since student loan has its share of disadvantages, its proper management could contribute to a loanee's success. Loan management is mainly achieved through due repayment. Typically, banks may require collaterals when giving loan offers because of the fears and risk...