Personal Finance 101: Importance, Strategies, And Smart Investment Tips

personal finance is a very important condition for a student. Student life is the most important and responsible time of life. The student remains carefree till higher education but as he studies further, he goes through many types of financial situations. A student must know how to manage finances while attending college. This skill is not limited only to saving but It is the basis of financial management of your future life. This skill trains us to manage the money we have, whether given by our parents, earned by us through jobs or received from scholarships.

In this blog post, we will understand in detail the methods of personal financial management of students and how we can achieve financial independence with further financial management.

Why personal finance management is important for students

As a student, we need personal finance management to adjust with the upcoming future. In this, the student is helped to meet his own needs in times of adverse family financial condition. This management depends on the person’s income, savings, needs and investment expenses made for the future. Student life is the time to make or break the future. At this time, along with studies, they should also limit their financial needs.

The Economic Education Administration released a report after analyzing the last two years that 21% of students are required to complete a personal finance course before graduating.

Budgeting: The First Step Toward Financial Freedom

To manage finances, a student must have his own budget, which will tell him how much to spend and how much to save. A student’s budget may be something like this –

1. Review your income:

Review the income received from scholarships, received from part-time jobs, received from parents as well as loans.

2. Making a list of expenses:

The student should make a list of the expenses incurred in transportation, rent, illness, essential household items, tuition and entertainment. Along with this, keep track of the expenses.

3. Making a list of items with variable prices:

After making a list of expenses, prepare a list of areas in which prices will be higher or lower, so that we can estimate the expenses in the future.

4. Format of Budget:

The budget should be made according to the rule of 60/20/20 keeping in mind the upcoming circumstances. 60% should be for essential materials, 20% for entertainment and emergency and 20% should be saved.

In this way, a proper budget can be made according to your needs and requirements. The student should strictly follow the budget made otherwise it will not be managed well.

How to cut down on daily expenses

1. Instead of eating outside, food should be cooked at home or in the room.

2. Use public transport instead of private transport. 

3. Buy old books or use friends’ books.

4. Make a list before you go shopping, use student discounts and shop in groups.

5. Control entertainment, do not go to unnecessary places.

6. Keep your needs limited and spend only when necessary.

How to invest money as a student?

The student should know how to invest the savings money. The amount of money for savings is small which can be invested in a suitable place for part-time and long term period to get a big fund. To invest, he should have knowledge of prevalent investment methods. Also student funds and policies issued by the government Must know.

Student’s investment methods

1. SIP: SIP is a regular investment method. In this, a certain amount of money is invested every month for the targeted year.

2. Stock Market: You can create a big fund by buying shares of companies in the stock market for a long time.

3. PPF: This is a scheme run by the government. Which gives tax free loans to people for long term.

4. Mutual Fund: It is a simple way of investment in which the money invested by us is managed by a professional fund manager.

you can also lay the foundation for a bright future by taking a life insurance plan.

FAQ

1.How can students start saving for the future?

Answer: Students should open a savings account in which funds can be transferred as per requirement. Also, open an investment account and invest small amounts of money as per your savings.

2. Which class to manage student finances?

Answer: There is no specific class or age for managing finances, it is an art. Nevertheless, it should be started from higher education itself, so that a good fund can be developed till graduation level education.