Money Management Guide for Students | Financial Literacy
Welcome to another “Learning” Guide for Students and today’s topic is “Financial Literacy”. Parent teach kids so many things i.e. do this, do that, stay away from this, etc. But how many parents are teaching their kids how to manage money? How many parents are educating their kids about finance? This topic of financial literacy is often ignored in most household.
My parents never taught me about money and finance in detail. And I’m sure there are many such parents who never had a discussion with their kids regarding to money or finance. It’s time to change that.
Start teaching kids about finance from an early age only. Start with following:
- What is a bank?
- what is savings account and current account?
- What are meaning of credit and debit?
- What is a personal bank account?
- How to withdraw money from an ATM?
- What is Income Tax?
Start with basics and then eventually start moving towards advanced finance topics.
The key is to make kids understand how money work, how to manage it, how to budget it, and how to save it. Kids should know the importance of money from an early age only.
Why Financial Literacy is so Important?
Financial Literacy is an essential Life Skill. In order to lead a life with financial stability and independence, you must understand how to manage your money.
Every parent must teach their kid about Finance and make them informed about the concept of money from an early age only.
A majority of the students are on budget and they have a lot of expenses such as tuition fees, rent and even daily costs. A student won’t be able to manage expenses and may feel overwhelmed if he or she is not financially literate. Lack of money management often leads to debt and poor credit management.
Parents and teachers must teach students on how to manage their expenses in order to have a financial stability in life.
Manage Personal Finance | Tips for Students
1) Start by Creating a Budget
Budgeting is a part of money management plan. Keep a track of your money and budget it to avoid unnecessary spends.
You can use a budget template or free app for budgeting. Here is what you need to do:
- Write down how much money you have for a month
- how much expenses you have
- how much money you need on a daily basis
The whole idea of creating a budget is to be aware of your current financial situation and plan things accordingly.
2) Keep a Track of Expenses
The most common students do is, they don’t have a track of their expenses. Never do this mistake, always keep a proper track of how much you’re spending and note it down.
Do the following to manage expenses:
- You need to make a list of necessary expenses such as groceries, rent, and gas or public transportation, etc. These are expenses which are mandatory and cannot be skipped. Always have a budget for them.
- Write down other expenses such as movies, entertainment, subscriptions, restaurant bills, etc. These are the expenses which you can cut in case you are on a budget.
Never cut a budget for necessary expenses.
3) Always Save Money
Always try to save a little money even if you are on a tight budget. Make saving money a habit. Building a stable financial future becomes reality once you have a habit of saving money.
4) Build an Emergency Fund
Your emergency fund should be at least 6 months of your total expenses.
Life is unexpected and you never know what’s coming next. So always have an Emergnecy fund as a backup to keep you going for several months in case there is a financial crisis.
Build an emergency fund and then start saving or investing money.
5) Build a Good Credit Score
Having a good credit score means you are a financial responsible person. A good credit score means higher chances of getting approved for a mortgage or car loan.
With a good credit score, you may even get a mortgage at lower interests.
Using a credit card for expenses and paying them off in full each month is one of the best ways to build a good credit score. A credit card is a giant financial tool, do not use it until you have a good knowledge.
Paying bills on time help you build a good credit score.
Important Reads for Students
The skill of managing money does not come in a day. It takes years of work to master the skill of finance. Financial Literacy is an essential Life Skill that every student must learn.
Through this post, we have tried to motivate parents to teach their kids about money management and we have shared a few tips for managing personal finance.
We are hoping you like the content here, if yes then do let us know through the comment section. Share this post with parents and students to help them understand the importance of financial literacy. We will see you in another learning guide soon.
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