Tips and tricks to help every student become financially literate

It’s no secret that most students live on a very limited budget, especially those that study abroad or home but away from their hometown. Unless you’re a finance or banking major, it’s pretty much a straight shot that you’re not well, or at all, acquainted with financial terms and tools that could define much of your adulthood, especially if you don’t take care of your cash flow properly from the start.

Since our school system fails to teach us how to become financially literate individuals, here are a few tips and tricks that will help you manage your finance properly.

If you’re going to take care of your monetary status, it’s important to get the hang of some basic financial terms. The most important term is your income, which is the amount of money you receive in a certain time frame.

Based on your income you can define your budget, which is the amount of money you need to spend to maintain your living requirements such as rent, food, utilities, insurance, clothing, tuition, and anything else that you might need for a decent living. 

You should also get acquainted with terms such as loan, debt, and credit, which can help you get over a period when the money is tight but can also become a “Sword of Damocles” if you don’t understand all of the terms and conditions of your loan.

If you ever decide to go for a student loan, consider the interest rate before you sign any documents that might keep you in debt for years after you finish your studies. A lot of students get part-time jobs writing academic assignments for a paper writing service or freelance tutoring their colleagues to avoid getting in debt because they are uncertain about their ability to pay monthly installments. 

Another important aspect of being financially literate is to know the difference between those things that you want and that which you need. This is a life lesson that many of us constantly fail mainly because we are unaware of the long-term financial impact of buying things we don’t need with the money we don’t have.

Before we make a purchase it’s important to be sure that our expense has a practical value, especially if we use credit to buy something. Burning your credit card is a smart decision only if you’re expecting a certain gain or profit out of the investment we made. If we’re going to buy the latest MAC just because it came out and we like it, that’s something we want and it’s an expense we can avoid. 

We need to pay our hospital bills, we need to get our teeth fixed, we need a new bed when the old one is broken, and we need to fix our refrigerator. Self-control is an important aspect of growing up as a person in all aspects of life, including finance. Learning to separate what we want and what we need is an important part of the growing process.

It’s great having your crib where your rules apply, however, living alone is not as sweet and simple as it seems. You need to be ready to pay all the bills, maintain the house, and plan for expanding in case you decide to start a family of your own. In some parts of Europe, living with your parents after you turn 18 is not strange, especially when there’s enough space for everyone. This gives you a few years to pack enough cash to start your independent life securely.

Apart from active income, which is your monthly paycheck or a freelance fee that you receive because you write high school assignments here and there occasionally, there are also ways to make passive income before you even snatch your college degree. Passive income includes ways to turn a profit without being actively involved in the process.

A lot of adults decide to get a piece of real estate and then rent that space. At first, the monthly rent could be used to pay for the loan required to purchase the real estate, but once the loan is settled you are looking into extra cash that you don't have to work for.

For those less ambitious, there are always stocks that you can invest in and enjoy regular dividends. If you invest cleverly, you could be looking at a substantial passive income. The good thing about stocks is that you don’t need a huge amount of cash to get you started, which is perfect for a student on a limited budget.

While saving your credit card info on a shopping website or Google Chrome is convenient and helps you make online payments faster, it’s important to keep your finance secure. This includes keeping your banking info safe from online criminals.

When you decide to pay for a good or service online, make sure the website runs on HTTPS protocol because that means your data is encrypted. Also, avoid sending your credit card info, especially if you receive suspicious emails. Even if you wish to help a friend make an online payment, better to make that purchase yourself than sending your info via SMS, email, or any other way. 

These were some of the most essential tips we wanted to share with you to help you manage your finance. Remember to spend money responsibly and only when it’s important. Passive income sources are always a good way to make extra cash, try to set up as many of those as you can.

Author Bio:

Brandon Kryeger is a freelance content writer engaged with several online publishers. His work is based on relevant sources of practical data. As a writer, Brandon delivers actionable suggestions that the audience can relate to.

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