BY DAVID GUTIERREZ
It is fascinating how much time and resources high schools and colleges dedicated to teaching students things that may serve as a foundation for their future careers and means of making money, yet do nothing to explain what to do with this money once they earn it. It wouldn’t be an exaggeration to say that absolute majority of people know virtually nothing about how money works as they graduate – the ubiquity of credit card debt and personal bankruptcy is a speaking proof of it. Economy students may be somewhat better off, but their curriculum mostly deals with larger issues without bothering with down-to-earth things like personal finance.
But if education system doesn’t see the importance of financial literacy, you must do so – and here is why you should take your steps to learn.
1. It will turn frugality into a habit
Student years are most likely the first time you live on your own, and it will be the foundation for most of your habits for the rest of your life. Learning good financial habits early on and will make you better prepared for anything that may happen later. It will also make planning easier – and although you may believe that starting to plan for retirement while in college is a bit too early, now is the best time to do so. The earlier you start making optimal choices, the more money you save and invest right now, without putting it off, the more comfortable you will be when it is time to retire – and this time tends to get close really suddenly.
2. It will give you a better ability to make use of opportunities
In order to use a financial chance, you have to a) be able to recognize it; b) have enough money. If financially literate, even students who are notoriously lacking in their finances can put away a part of their funds to always be ready to use a promising opportunity. And having sufficient financial knowledge will give you a hint that, for example, current BUNZL plc share price is a good reason to invest in it to make a profit later on.
3. Everybody is after your money
Even if you demonstrate sufficient willpower and save up enough money to invest in something, modern market has too many opportunities: banks, insurance firms, credit card companies, brokerage firms, financial planners, etc. are all hungry for your money, and without sufficient knowledge in the sphere of finance you won’t have any chance to make an informed choice.
4. You will gain control over your life
The majority of people have no idea what happens to their money once they earn it. It just comes and goes without their registering how it happens, what they spend it on – it is a financial equivalent of being too drunk to control your own actions. Becoming financially literate means gaining control over your money and, consequently, over your life as well. You will know exactly how much you earn and what are your main expenses are. And once you know this, you will have a tool you can use to make meaningful changes.
During your student years, it may not feel that planning for retirement and rationing your money is an important thing – life feels long, and there is enough time to earn all the money in the world. However, this impression is fleeting – life is unpredictable, and without understanding how money works, you can find yourself not only incapable of using opportunities that go your way but at a loss when dealing with even the most trivial problems as well.
Better healthcare means that people today tend to live longer than previous generations, which means that you can look forward to a longer retirement. However, it also means that you should do an even better job of planning for the future – while the rest of the world seems to be dead set on distracting you.
David Gutierrez has worked in the field of web design since 2005. Right now he started learning Java in order to get second occupation. His professional interests defined major topics of his articles. David writes about new web design software, recently discovered professional tricks and also monitors the latest updates of the web development.