Gen Z is far more advanced than the previous generations. They are much more well-informed and highly aware of what is going on in the world, thanks to the internet revolution.
It would be safe to say that Gen Z is highly street-smart and knows how to survive in the cunning world.
However, if there is one thing millennials wished they knew earlier, it has to be about financial literacy and financial planning.
Most people entering college in 2020 are absolutely clueless about how to manage their finances, do their taxes once they get a job or even debt planning.
However, once a person starts college, their whole life changes. It feels like you are given the stress of managing your finances almost overnight.
With no prior knowledge or training in the matter, many college-goers see that their funds go haywire in the first college semester itself.
What follows is poor decision-making, and sometimes, the damage is irreparable.
That is why it is essential that young adults entering college be given a crash course in financial planning and management.
Seeing the current state of affairs, colleges across the country have started special classes on financial literacy for students.
While college is about making friends and having fun, a few hours of actual learning in a week can help students become wiser when it comes to money.
Financial literacy is essential, especially for students in college. Read on to find out why:
Learn Skills for Life
With financial literacy comes financial independence. You get to understand money, the value of money, how it has to be spent and what resources you can use to save money.
Financial literacy will let you in on unknown tips and hacks to handle cash with finesse to the point- your parents will be proud.
Money-managing skills that you learn in college will not only make your college years amazing; these are skills for life that you develop. They will help you throughout your life and who knows- maybe you will someday pass it down to your children as well.
Plan Debt Aversion
Debt is the biggest problem with youth these days. A contributing factor to this problem is the fact that credit is available at such ease (within minutes, actually) to youngsters.
Consequently, debt weighs like a ghost on a person’s shoulders. And when a person is in college, barely making ends meet with part-time jobs, debt can become a headache that refuses to go away.
Financial planning and financial education will teach students how to avoid debt and steer clear of debt-related problems while in college. Even in the later stages of life, these learning will come handy for steady debt aversion.
Always remember, there is no good debt, all debt is bad debt; don’t believe what the credit card companies tell you.
Financial Planning = Financial Independence
When in college, a student is shielded from the many problems of being an adult in the real world. You don’t have EMIs to pay, your home does not have a mortgage, and you don’t have children to look after.
Chances are, there is very minimal need to be financially independent at the moment, while you are in college.
However, the financial literacy skills that you learn right now in college will help you become financially independent later in your life.
Equipped with the right knowledge, you can secure your future when you become financially literate. It will make you more confident and ready to take on your finances once you get a real job.
Learn About Budgeting
When you don’t have a fixed monthly budget, it is guaranteed that your needs will rise and spend uselessly on things that you don’t even need.
With financial literacy, you will first learn about making a monthly budget. Making a monthly budget will help you categorize what expenses are necessary and what costs are frivolous.
Budgeting will help you realize what you can afford with your income and how to align your future goals accordingly.
Financial literacy helps you create a budget that can accommodate all your needs without having to undergo debt processes.
Cut Unnecessary Spending
When you learn about budgeting, you automatically understand how to curtail unnecessary expenses.
A sense of budget, along with financial literacy, will help you to leave the spendthrift personality you have.
Pub night in college is fine, but when it becomes an everyday habit, it becomes a problem. Similarly, ordering takeout once in a while is fine, but when you replace it with meals by the hostel mess, it becomes a problem.
Introduction to Taxes
Taxes are the biggest woe of any young adult entering the job market. You soon realize that getting the job was not that difficult but handling the taxes can be challenging.
The problem with doing taxes is uniquely enhanced with people employed in the unorganized sector or non-conventional jobs that require freelancing.
These people have no idea how to file their taxes, what are the deductions applicable, what salary is tax-exempt and many such things.
A crash course in financial literacy will help you understand how taxes in the country work. This way, you will be able to do your taxes without any external help.
Additionally, if at any point in life, you think about starting your venture and become an entrepreneur, you will not have to fret about the taxes that will be applicable.
Realize the Importance of Investment
One of the first things that financial literacy will teach you is to start investing early. Whether it’s buying insurance or putting money in SIP or ULIP plans, saving money and spending it is always in your best interest.
Financial literacy will make sure that you understand the pros and cons of investing in reliable health insurance, term insurance and securing your retirement with the right investment plans.
It will equip you with basic knowledge about stocks, bonds, trading, stock market, how to invest in equity and debt investment funds.
You will also realize that mutual funds and insurance plans are some of the best investment plans you can get in your life.
Learn About the Art of Saving
Everyone knows that saving is essential and the best thing to do to secure the golden years of your life but not everyone knows how to save.
However, bear in mind that saving money does not mean that you become a miser in life.
Of course, you want more delicate things in life. But you should know that there is a time for everything.
Financial literacy will teach you to save as much as you can in your prime years and invest the money to good use, so it grows.
With a high return on this investment, you can make all your dreams come true.
Make Informed Financial Decisions in Life
Financial literacy can help you make informed business decisions in life.
Even small things like whether to pay in credit or cash, how to save money while shopping, and also how to buy real estate will become more comfortable for you.
Tips learned in financial literacy will make you reflect and think twice about every decision you make in life.