Why It’s Crucial To Teach Them

For students, financial literacy is incredibly significant. Particularly, during college they learn numerous things to evolve in life. But it’s also essential to learn about finance and prepare a plan about it earlier to shun regrets in the future. For college students, it can be challenging to manage finances, but it’s a necessary skill that’ll decently serve them for their entire lives.

With the right financial education, both boys and girls can set up the groundwork for a robust financial future or even financial independence. Financial literacy is the knack for understanding and effectively using various financial skills, including personal financial management, budgeting, and investing. 

Most of us aren’t driven to have a good financial plan in our college days and end up repenting throughout life. In this article, we will study strategies for students to start their financial plans, enabling them to build solid financial ground for the future.

Why Does Financial Literacy Matter?

They empower students to create clear financial objectives from an early age, such as saving for tuition costs, managing living costs, or investing for the future. Besides, a strong financial plan motivates discipline and restraint, teaching students how to budget and save. 

It gives a financial safety net, helping students to manage sudden financial hardships without going into debt. A detailed financial plan can fairly relieve financial stress, boost overall well-being, and educate students for a more stable financial future. 

It also supports them financially in daily living expenses, living within their means, short-term borrowing, and long-term budget forecasting. To manage these and other essential financial realities properly as they go through life, they must be financially literate. It is critical to plan and save enough to provide a decent income in retirement, avoiding high levels of debt that might result in defaults or bankruptcy.

What is a Financial Goal?

A financial goal is a monetary objective that you want to acquire. This might be to build a grand home or save enough for a week-long holiday next year. Your financial goals can help navigate you as you gather savings, decide to invest, or become debt-free. Your financial objectives are milestones on the road map to living the kind of life you desire.

Let’s examine this with an example:

Neel and Anuj, the college pals, obtained Rs 1000 each as monthly pocket money. Neel thought of planning and saving his money wisely while still enjoying it. In contrast, Anuj took a random approach, spending on fun and parties without any definite plans. Neel fixed Rs 700 to tuition fees and books and saved Rs 300, which he assigned to a recurring deposit and a post office account. In comparison, Anuj finished his whole amount on trivial stuff.

In college, Neel’s diligent savings of Rs 300 monthly for 3 years grew into a vast amount. This benefit allowed him to pay off his studies, securing him to graduate fully debt-free. Neel’s disciplined loan refund not only cleared him financially but also gained him eligibility for a credit card post-graduation. This little step made his daily life smooth. 

Neel acquired a job with a lower salary than Anuj, but his solid financial habits made all the difference. Neel nurtured his investment habit, while Anuj despite a higher salary, struggled with loans and EMIs, squandering money.

In college, Neel’s financial planning led to a happy life, while Anuj’s lack of it left him drowning in debt. Lessons learned: early financial planning ensures joy over debts.

Types of Financial Goals:

As you establish financial goals, evaluate the three major types of goals, which can be broken down by time frame –

• Short-term: These are goals that you expect to fulfill within a year. Items might comprise taking a short vacation, shifting to a new apartment, or making a major purchase, like a new computer or furniture. It enables students to manage their daily living expenses, including tuition and textbooks. It’s also vital to set up an emergency fund to address unforeseen costs.

• Medium-term: The students can attain this goal within five years. If they intend to take a bigger trip or study abroad, or they’re saving up for graduation. They can strive to alleviate their student loan deficits by seeking part-time jobs, applying for scholarships and grants, as well as establishing a positive credit history through responsible credit cards and loan management.

• Long-term: Student financial planning for the long term, realized after five years, should include setting ambitious goals, such as saving for post-graduate education, making a down payment on a home, or saving for retirement. Investing early, even in small sums, can give students the benefit of compound interest over some time. 

Some potential financial goals for college students are the following:

Building a Budget

A budget is your roadmap to utilizing your money wisely and fulfilling your financial goals. While creating a budget, begin by listing your sources of income, comprising any part-time job or stipends. Follow this with your expenses like rent, tuition fees, utilities, groceries, and optional spending. Classify your expenses as regular (unchanging) or irregular (fluctuating).

The solution is to ensure your income covers your costs. Utilize budgeting apps or spreadsheets to follow your spending and remain the fittest of your financial power. Budgeting helps you monitor your finances, avoid overspending, and protect money for the future. 

Sustaining an Emergency Fund

An emergency fund acts as a safety net to cover unexpected costs like unforeseen medical emergencies, vehicle repairs, or academic exams. Attempt to save at least 3 to 6 months’ credit for living expenses in your emergency fund. Begin by committing a small part of your income aside each month, till you attain this purpose.

Keeping an emergency fund will decrease financial stress, stop you from running into debt, and make you stay calm.

Doing Part-Time Jobs

As a student, part-time work can very much impact your financial resilience. They not only give you extra income but also useful work experience. When looking for part-time jobs, notice for roles that complement your studies or give you skills relevant to your future employment.

Balancing work and studies can be challenging, so it’s crucial to manage your time efficiently and convey to your boss your class schedule. Part-time jobs support you to cover daily expenses, make your resume, and salvage your future.

Having Credit Management

During college time many students are taught to use credit cards for the first time. Honest credit card practice is important. Pay your bills on time to create a good credit history. Watch your credit card balances, and aim to pay them off in full each month to prevent high interest fees.

Recognize that credit cards aren’t free money, they’re a means to build credit and make worthwhile purchases. Resist the lure of amassing debt that can disturb you in the future.

Saving & Investing

As a college student, you might feel it’s too early to save and invest, but starting early can fairly boost your financial future. Even little payments to savings accounts or investment portfolios can rise substantially over time due to compound interest.

Assume opening a savings account or a low-cost investment account. Modify your investments to lessen risk. Form specific goals for saving and investing, whether it’s for an emergency fund, a future vacation, or retirement planning. 

Pursuing Financial Education

Investing time in informing yourself about financial education is extremely beneficial. Read personal finance books, search websites, and pursue college courses. Visit workshops on financial management if your college delivers them. 

Financial literacy can also be achieved through listening to podcasts, subscribing to financial content, or discussing with a financial professional. The more you learn, the better capable you’ll be to make informed financial judgments.

Exploring Professional advice

If you’re in a tricky financial problem, don’t be afraid to ask for professional advice. There are advisors and counselors of finance, who can teach budgeting, debt management, and investment methods. Several colleges provide free financial counseling services to students if needed.  

CONCLUSION 

As a college student, starting your financial goal is a vital step toward a safe financial future. By grasping budgeting, maintaining an emergency fund, seeking part-time work options, managing credit wisely, saving and investing, and often educating yourself, you’re establishing yourself for financial prosperity. Wanting professional advice when needed expands the backing to your financial journey.

Know that financial strength takes time and discipline. Stay concentrated on your goals and make adjustments as desired. The financial habits you cultivate in college can make the road to a financially stable and thriving future.

-Shashi Thakur