You’ve probably heard the phrase financial literacy before, but do you know what it means? When you spend or save money, do you think about the implications of your actions? A financially literate student is one who makes monetary transactions with confidence because they understand the right way to go about it.
Financial literacy is an important determinant of how you lead your life because money is an underpinning faction in many facets of your life. For instance, if you want to meet all homework deadlines, you will sometimes need to buy assignments when there isn’t enough time to finish them on time.
When you think before transacting, you’ll be in better control of your future because no expenses will catch you off-guard. Even with the inevitable highs and lows in your financial life, you’ll be in a position to stay comfortable in college. Simple acts like tracking your credit cards and bank accounts ensure you don’t put yourself in a financial situation you can’t get yourself out of.
Before we find out the essence of financial literacy, let’s first understand what it really means. In simple terms, it is the comprehension of financial concepts and helps you establish a healthy financial well-being. To be financially literate, you need to begin with understanding the basics of monetary transactions.
Here are the benefits of financial literacy:
Avoid Overspending
Whether you earn your own money or depend on a third party for financial support, it’s important to pay attention to your spending. Even when you’re used to buying assignments from MyCustomEssay.com, ensure you look out for discounts so that you save money each time you get academic help.
Financial literacy teaches you about budgeting so that you don’t overspend at any point in your life. A budget is a draw-up of how much money you’re free to spend within a given timeline without messing up your future comfort.
Ideally, you need to set timelines on how long specific amounts should sustain you. From there, you can break down the lump sum amounts into the necessary expenses within that period. Your spending habits should correspond with how much money you have access to so your accounts don’t run dry before the stipulated period elapses.
A budget is like a spending plan that keeps you in check because you can easily fall victim to impulse buying if you have a significant amount of money in your account. The budget is a reminder that the money you have is supposed to be for your present and future needs. Ensure you regularly revisit your budget to ascertain that you’re not exceeding your spending limits.
Avoid Debt
Debt can easily steal your joy because the constant knowledge that you owe money leaves you with no peace of mind. Therefore, you need financial literacy to find out ways to avoid falling into debt. That is to say that even if you get to take a loan, you do it responsibly, in a way that allows you to pay it back as soon as possible.
It’s understandable if the only way to secure something you urgently need is through a loan. However, this is no excuse to stay in debt for an extended period. Make sure you use lenders with favorable terms so that you don’t end up paying high interest. Look for loan apps with the lowest interest rates and most sensible qualification requirements for instance when you need to borrow money to accomplish your goals.
Avoid Bankruptcy
If you happen to have a significant amount of money, or you run a business as you study, you should know that bankruptcy can be one financial decision away. Therefore, every money-related decision you make should be carefully thought out to ensure nothing goes amiss.
That said, you should consult with a financial consultant to find out the steps you should follow to create an emergency account in case things go south. Because at the end of the day, things can turn from bad to worse even when you’re financially literate.
Secure Your Retirement
The truth of the matter is, every year, you’re drawing closer to retirement. 65 years might seem so far off when you’re in your twenties, but rest assured, like the sun sets in the west, you’ll get to this age someday. Preparing for retirement ensures you don’t have to worry about your well-being when you are older.
The good thing about starting a retirement plan early is it gives you enough time to save up as much money as you possibly can. And the magic of compounded interest ensures you have a gold mine by the time you’re in your 60s.
Wrapping Up
To understand why financial literacy is important, you first have to be financially literate because you cannot comprehend something you’ve not experienced. Every college student needs to go out of their way to improve their financial behavior. Whether you’re spending money you’ve earned, or you’re being sponsored by either your parents or scholarship grants, you’ve got to treat money with the respect it deserves.
