The Importance Of Financial Literacy For Students
By Benard Nweke
Effective financial management begins with a solid understanding of the fundamental principles of earning and managing money. Before we dive deeper, let's take a moment to review the basics.
Financial literacy is more than just being familiar with money; it's the ability to make informed decisions about how to use it wisely. In essence, financial literacy encompasses understanding key financial concepts and applying that knowledge to navigate everyday financial choices. When it comes to students, financial literacy takes on a specific significance. It's about empowering young minds to grasp the value of money, make smart financial decisions, and develop healthy spending habits that will serve them well throughout their lives.
Managing finances can be a daunting task for students, especially during economically challenging times. Even those with parental support often struggle, and those who are self-funded face even greater difficulties. However, by acquiring financial literacy skills, students can learn to effectively manage their limited resources, making the most of their "pocket money" or upkeep allowances.
As an unknown author aptly put it, "If you don't understand the knowledge of money, and you don't have a bank account, then you are an economic slave." To avoid this fate, it's essential to equip yourself with financial literacy skills. By doing so, you'll be able to maximize your financial resources, no matter how limited they may seem, and take control of your economic well-being.
Acquiring financial literacy offers numerous benefits that can transform your relationship with money. Here are just a few of the advantages:
1. Informed decision-making: Financial literacy empowers you to make smart financial decisions, ensuring you're in control of your money.
2. Debt management: By understanding financial principles, you'll be able to manage bills and avoid unnecessary debts, reducing financial stress.
3. Future planning: Financial literacy helps you develop a savings mindset, preparing you for long-term goals and unexpected expenses.
4. Expense preparedness: You'll be better equipped to anticipate and manage future expenses, avoiding financial shocks.
5. Smart spending: Financial literacy teaches you to prioritize needs over wants, ensuring you save money and spend wisely, achieving financial stability and peace of mind.
The significance of financial literacy cannot be overstated, especially for students who face financial challenges on a daily basis. I can attest to this personally. When I gained admission to the university in 2021, I made the daunting decision to self-fund my education, without relying on family support. This was one of the toughest choices I've ever made. As a self-sponsored student, I was responsible for covering all my expenses, including rent, tuition fees, food, clothing, and other essential costs. This experience taught me the importance of managing my finances effectively and making smart financial decisions. It was a steep learning curve, but one that has been invaluable in shaping my financial literacy skills.
Living by the principles of financial literacy has taught me a valuable lesson: never spend more than I earn. In fact, I've adopted a simple yet effective rule - if I cannot afford something twice in a row, it's likely beyond my financial means, and I avoid it.
As Warren Buffett once wisely said, "Do not save what is left after spending, but spend what is left after saving." This mindset has been a game-changer for me.
I recently had the opportunity to speak with Comrade James Chidera Wisdom, a final-year Mass Communication student at Nnamdi Azikiwe University, Awka. Despite receiving full sponsorship from his parents, James uses his skills as a fashion designer to support his education and develop a sense of financial independence.
James's understanding of financial literacy has allowed him to maintain a disciplined approach to money management. He avoids extravagant expenses and instead prioritizes saving and investing. His long-term goal is to purchase an industrial sewing machine after graduation, which will enable him to expand his fashion design business.
“I get financial sponsorship from my parents, but I still save my money which I intend to use for acquiring a modern sewing machine after my sign-out around July”, he said.
Moreover, James credits his knowledge of financial literacy for not only helping him navigate his current financial situation but also for preparing him for a secure financial future, even as a student. In essence, possessing financial literacy skills has empowered him to make informed decisions that will benefit him long after his student days are over.
In fact, the benefits of financial literacy are so comprehensive that any student who grasps its principles is unlikely to make costly financial mistakes. By embracing financial literacy, students can set themselves up for a lifetime of financial stability, security, and success.
