Financial Literacy: What you should know as a Student.

In the Global Financial Literacy survey by S&P, African countries have the lowest financial literacy rates in the world. As much as formal financial education is paramount in Africa, many students graduate without basic financial knowledge, leaving them vulnerable to financial pitfalls, which is quite unfortunate. 

In this article, we will explore what students should know about financial literacy and how far it determines their financial fate after school. Let’s roll!

What is Financial Literacy?

Financial literacy simply means grasping and learning how to manage money wisely. Think of it as having a collection of skills that guide you in making intelligent decisions about your finances. 

This covers areas like creating a budget (a money plan), setting aside money for things you desire, and having the ability to make wise choices regarding loans and investments.

Essentially, it's about using your money cleverly to pave the way for a better and safer future.

Why is Financial Literacy for Students Important?

As a student, being financially literate helps you take charge of your finances. It provides you with the knowledge and skills you need to make healthy financial decisions for the rest of your adult life.  Let’s look at some further reasons why you should take financial literacy seriously as a student;

Long-Term Financial Planning

Understanding financial concepts enables you to think about your long-term financial goals and plan for them. Whether it's saving for an additional degree, a home, retirement, or other life goals, financial literacy helps you make informed decisions to achieve these objectives.

Debt Management

Many students eventually take on loans to go by during their school days. A lack of financial literacy can lead to poor decisions when borrowing money and managing debt, resulting in long-term financial struggles.

Career and Income Decisions

Financial literacy is well connected to students’ education, career choices, and income potential. With a sound knowledge of financial literacy, you can make informed decisions about your educational paths and career trajectories.

Consumer Awareness

Financially literate students are better equipped to make informed consumer choices. There is a good understanding of concepts like interest rates, fees, and terms and conditions, allowing you to avoid predatory financial products and services. 

Without financial literacy, most students are likely to fall victim to financial scams and fraud. So, with financial literacy, you can recognize red flags and make informed decisions to protect your finances.

Entrepreneurship 

If you don’t want to do the 9-5, and you are interested in owning your own business, financial literacy is essential, even for 9-5ers as regards what they do with their salaries. Entrepreneurship-wise, financial literacy helps you to understand concepts related to starting a business and managing finances.

Breaking Cycles of Poverty

It is not uncommon to have students coming from low-income backgrounds. If you fall into this category, financial literacy can be particularly empowering, equipping you with tools to break cycles of poverty and build a more stable financial future.

Other reasons for being financially literate include empowerment, confidence, economic understanding, crisis preparedness, and so on.

Financial Literacy Components that Students Should Know

Financial literacy can be broken down into several key components, each addressing a specific aspect of personal finance. These components include budgeting, saving and investing, and debt management.

Budgeting

Budgeting involves creating a spending plan that aligns with your income or allowance, helping you to manage expenses, and avoid overspending.

Saving

Not only is saving a form of safety net for emergencies, it is also a way of building discipline around money. Financial literacy puts you on a path where you know the percentage of your income to save, what you should save money on, and when to be or not to be frugal. It is even more efficient if you incorporate a platform that allows you to save automatically. On Bitnob, users can create a savings plan for them to save in bitcoin automatically according to their preferred intervals. Download the Bitnob app to start your savings plan today.

Investing

While investing is crucial for long-term financial stability, most students fall victim to Ponzi schemes disguised as legit investment schemes. Financial literacy opens your eyes to the best asset to invest in, bitcoin for example, and helps you to recognize any form of red flag in the world of investing. 

Debt Management

When you understand how to manage debt at an early stage through the lens of financial literacy, it will be easy for you to navigate your finances through it, such that you know when to take a loan or not to take it at all. There is also a part of debt management in that you learn the types of debt, interest rates, and strategies for paying off loans efficiently.

4 Major Tips for Implementing Financial Literacy

Financial literacy for students requires some level of intentionality. Here are some practical tips for implementing financial literacy as a student;

Developing Good Spending Habits

This is no brainer, becoming sound in financial literacy starts with cultivating some positive spending habits that prevent impulse buying and encourage saving.

Involve Technology

It is unrealistic to put your financial goals in order manually or all by yourself. You need to leverage platforms that make it seamless. For instance, if you want to start saving or investing, it takes effort and time to monitor market trends or portion your savings manually. Let’s say you are interested in investing in Bitcoin, a bitcoin-native company like Bitnob helps you to make periodic bitcoin purchases automatically without worrying about being consistent or catching up with the trends.

Investing in Financial Literacy Resources

As a student, you can go beyond your formal education to enhance your financial literacy.

There are online resources that offer interactive tools, courses, and simulations to help students further develop their financial knowledge.

Also, attending workshops and seminars hosted by financial experts can provide you with practical insights and strategies.

Seeking Financial Advice

Consider talking with a professional financial advisor who can provide tailored counsel based on your financial situation.

Financial Literacy Should Be Taught!

To promote financial literacy among students, it is imperative to introduce structured financial education within educational institutions such as schools and colleges. A significant number of students complete their education without fundamental financial understanding, leaving them exposed to potential financial challenges. 

Therefore, formal financial education can effectively close this knowledge gap, equipping students with the essential skills required for financial success. Found this helpful? Feel free to share with other students.