blog Personal Finance | 5min Read
Published on December 22, 2021
High-school years are undoubtedly some of the most crucial years of your life. It sets you up for all your future endeavours and also outlines success in the coming years. As you pave your way in the world, you realize how finance drives almost everything around you. Yet student financial literacy has continued to be the most disregarded topic over the years. As a result, we see news headlines like “Indian banks saw a 142% increase in student loan defaults during a period of just over three years.”
Financial Literacy Vs. Young Adults
Before you process the significance of money management skills for students, let’s have a quick exercise and check how much you know about money already. Take your time to solve this crossword and come back to understand why financial literacy can be the most lucrative skill for you to acquire in 2022!
Pro tip – Share the crossword with your friends and see who solves it first!
Without further ado, let’s find out the story of a 22-year-old software engineer, Viaan. Smart and intelligent, Viaan has always been one step ahead of his peers. Completing high school with exceptional scores, graduating from one of the best colleges in the world, he has fast-tracked his way into the professional world with one of the best IT firms in the world. He’s minting money while enjoying a great lifestyle. Sounds perfect, doesn’t it?
However, the facade of this perfect life breaks into truth when Viaan realizes he has no time or money to invest in himself, his passion project. So today, in spite of having a strong source of income, he is finding it difficult to manage his daily finances, let alone save up for his entrepreneurial dreams. The flame in his heart, of becoming financially independent early in his career and doing something on his own, is now flickering.
In this story, if you notice carefully, Viaan is not entirely wrong. He has equipped himself with some of the most sought-after 21st-century skills which made him employable as well as capable enough to work on his entrepreneurial ideas. But all these skills couldn’t help him learn how to manage the money he was making. Imagine owning a PS5 but not knowing how to use it! Who would want themselves in a situation like that?
Why Should You Learn Money Management Tips So Early On?
If you think Viaan’s story is an exception and he might have been the only person indifferent towards money management skills, you might be wrong. How to save money as a student is rarely on top of the minds of our young adults. The All India Financial Inclusion and Financial Literacy Survey revealed that merely 26% of the students in the adult population could cross the minimum threshold score when evaluated across different components of financial literacy. Before you scroll down, read that again!
What difference can student financial literacy bring into your life? A lot of you who are reading this might not even be an adult yet. Do you still need to worry about financial literacy?
Let’s break this down through these 5 pointers –
1. Manage Money And Do Budgeting
The first time Viaan received his internship stipend, he spent it all on his science project for the next term. Had he kept a track of his income and spending, and developed a plan to satisfy his goals back then, the same practice would have helped him today.
Budgeting is a basic money management skill that you can adopt today. Observe the incoming and outgoing flow of your money. Set your goals and adjust your savings and expenditures accordingly, to be able to achieve the target. Do it for a week, extend it to a month, and watch it become a rewarding habit as you grow.
2. Become Smart And Financially Independent
Nothing is as cool as owning an enviable skill that works for you, even when you’re sleeping. Some of the smartest minds on Earth are ready to pay loads of money to people who can help them manage their assets. This is only because they found out the way to earn money, not to manage it.
Building a new skill is a step-by-step process. Today you’ve picked up this article, tomorrow you might pick up a bestseller on personal finance. You just need to start!
3. Improve Financial Discipline And Capability
Your parents would always be there to support you financially. What matters is how soon are you ready to become financially capable enough to support your own dreams, and perhaps, some of theirs too!
How difficult is it to give up on one of the night-outs and dine-in instead? How challenging is it to save a little extra money to fund your next big purchase? Think about it and bring change.
4. Increase Your Self-Confidence And Fulfill Your Dreams
Being financially literate builds your arsenal to fight the cons of the real world. It can give you an edge you never thought you could have. Small-yet-smart financial decisions can pave the way for your big decisions in life. Be it the dream tour or the coveted university, every milestone becomes achievable if you start early.
Use a personal finance management app and set up a goal with the time you have to achieve it. Chalk out a plan and follow it religiously. Your future self will thank you!
5. Start Investing Right Away
The fact that early investments can make your portfolio multiply over time, is no stranger. What you need to know is that you can learn and start investing in some financial instruments, even before 18 years of age. On top of that, you can always add your own share to your parents’ portfolios. To learn how to start investing as a student, check this out! <add link to the blog ‘How to Start Investing as a Student?’ here>
All you need to do is, look up resources on the internet and start learning. Observe the market fluctuations, understand the various financial instruments, curate your analyses, and make sensible investments.
By now, you must have realized how financial literacy can outplay most of the other 21st century skills one can possess. Of course, all other skills have their own importance in different stages of your life and career, but money remains a constant.
Most 11-year-olds would spend their pocket money on toys or video games. The kid who decided not to do so ended up creating a fortune of a lifetime! Not everyone can be Warren Buffet but what’s stopping you from trying?
Watch this space for more insightful pieces that can be the game-changer for your financial decisions. Kickstart your financial literacy journey with us today!
Answers to the crossword:
Across: 2. BORROW; 3. SPEND; 6. ECONOMY; 8. WANT; 9. NEED
Down: 1. DONATE; 2. BUDGET; 4. JOB; 5. SAVE; 7. MONEY