It is essential for students to understand the basics of finance and how money works in order to successfully navigate life after graduation. It does not matter from which discipline you are coming, because all professions have to deal with finances. Finance and economics students have to deal with finances throughout their academics; they even have to conduct research on related topics for which they sometimes buy Economics Dissertation Writing Service or do the research by themselves, so they are well aware of financial literacy. 

However; if all you ever did was buy management dissertation topics or have done presentations on psychology then there is a high chance that you have little to no financial literacy.  Such people are more prone to becoming a victim of financial fraud than the ones with financial literacy. This post is intended to help students of all disciplines to be acknowledged with financial literacy and its importance. 

What is financial literacy?

Financial literacy is the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. The four fundamental pillars of financial literacy are;

• Debt.
• Budgeting.
• Saving.
• Investing. 

If you are capable enough of managing these four pillars and know well about them then you are financially literate to manage your finances without becoming a victim of fraud. The number one problem in today’s generation and economy is the lack of financial literacy which is why it is important to be financially literate.

• Some basics of financial education:

Did you know that the financial literacy level among youth is low across most parts of the world which has become a cause of concern? Also, it has been observed that various socio-economic and demographic factors such as age, gender, income, marital status, and educational attainment influence the financial literacy level of youth and there exists an interrelationship between financial knowledge, financial attitude, and financial behavior (Singh, 2018).

More is less, is the statement that perfectly fits when it comes to financial education. Still, it is important to acknowledge readers with some of the basic rules of financial education. Students must be aware of the seven main components of financial literacy that will help them in the upcoming years; these components are as follows;

• Interest.
• Budgeting.
• Debt management.
• Credit.
• Identity theft protection.
• Savings.
• Financial goals.

Keeping in mind all these components, there is a 10-20-30 rule. According to this rule; you must spend 50% of your after-tax income on mandatory living expenses or needs, 30% on wants or things that you desire, 20% on savings, and 10% on managing your debts. 

Importance of financial literacy for students:

Accounting and economics are known to overlap with one another as they both belong to the family of finance (bestassignemntwriter, 2022). Financial literacy prepares you for unexpected costs or events that may arise during adulthood, allowing you to make informed decisions so that your finances remain secure. The following points stress the importance of financial literacy for students;

• It makes you self-sufficient and financially stable.
• It helps you in saving money.
• It allows you to understand the difference between needs and wants.
• It helps the students in the management of the budget when they enter into professional lives like paying bills, purchasing a home, paying for college, retirement plans, and so on. 
• It helps them in building a realistic roadmap that will guide them through their daily lives when it comes to financial management.
• It makes them better prepared for emergencies. People can prepare for the unpredictable by learning about financial literacy issues like saving or emergency planning. 
• A person’s goals may be more easily attained with financial literacy. Students can make plans that set expectations and keep them accountable for their finances.
• It inspires confidence. Consider making a life-altering decision without all of the necessary information. 

How students can manage finances?

As this post is all about acknowledging students about financial literacy so, here are some key aspects of financial literacy worth considering as a student:

• Budgeting:

Before spending any money, first, create a budget that allows you to plan for upcoming expenses while keeping track of where each dollar goes. Developing effective budgeting habits early on can help prevent debt problems later in professional life.

• Savings:

As soon as you start earning an income and have a reliable source of cash flow coming in whether it is through part-time work or full-time employment, establish regular savings goals even if they are small ones initially. Investigate different options depending on your lifestyle preferences and risk tolerance since this helps determine the types of investments suited best individually.

• Debt: 

Many students find themselves neck-deep in credit card debt which is mostly student loans because they weren’t aware of what exactly carrying balances cost. It affects both ways, which are financial ways (interest charges/service fee) as well as, potentially emotional ways because bills pile up leading to pressure situations disabling payments being made regularly ahead of deadlines quickly approaching resulting in late payment penalties.

• Taxes:

Even though; students don’t have to face this situation during their academic life but sooner or later they must prepare themselves for it. So; be ready to file tax returns accurately and timely every year by using IRS guidance notes when you step into your professional life.

Conclusion:

Being financially literate is important for every individual out there whether he is a student or an adult. Even though; educational institutes must acknowledge students about financial literacy but as long as they have not started this, it is important for students to learn about financial literacy through various online posts and taking guidance from professionals. Hopefully; this post will help the students in understanding all about financial literacy. 

Bibliography

bestassignemntwriter. (2022, July 23rd). Accounting VS Economics: Which Study Can Elevate Your Business? https://bestassignmentwriter.co.uk/blog/accounting-vs-economics-which-study-can-elevate-your-business/ .

Singh, N. G. (2018, Jan 8th). Financial literacy among youth. International Journal of Social Economics .