The ‘real world’ is not as simple as student life.
It can be a shock when you graduate and many of the discounts and benefits of student life simply drop away. You may realise that you can’t afford to do everything that was available to you at school or university – and that ‘real life’ tends to cost more. If you want to ensure a smooth transition from graduation to a positive financial future then financial literacy is going to be important.
So we asked the guys over at the Solution Loans Money Matters Blog for their advice and here are 6 reasons students need to be financially literate:
1. Now is the time to start saving for retirement. When you graduate you need to be ready to start planning for your future, especially putting money aside for a comfortable retirement. This may sound like jumping the gun but the earlier you begin saving for retirement, the less you’ll need to put aside every month. Start getting to grips with what the cost of retirement is likely to be and how long it will take to save for it on an average salary. If you work on financial literacy and understanding now then you’re much less likely to end up with a bleak financial future.
2. If you’re not financially literate it’s very easy to get into trouble. From misunderstanding how the interest on a loan is going to stack up (there’s more info on that here), to not realising just how much money you’ll need to buy a property, the consequences of poor financial literacy can be incredibly costly. You can save yourself a lot of future fees, charges and financial errors by educating yourself now.
3. When you graduate, the fees will kick in. Leaving university often means saying goodbye to the freebies. This could be an interest free overdraft, cheap beer, discounts on all your favourite stores or free travel. Although you might have more income when you’re earning, the freebies are few and far between. Ensuring you’re financially literate now will enable you to cope when those freebies start to disappear.
4. Hit the ground running with your money management. Students who are not financially literate tend to get into trouble after graduation. Having a significantly bigger income without any idea of how to sensibly manage it can mean failure to live within your means and getting into trouble with debt. Learn financial literacy now and you’ll be able to budget, plan and make the most of the moment when you’re finally earning a decent wage.
5. Student costs can escalate if you’re not on top of them. Being financially literate as a student will enable you to do a better job of managing your money right now. This is especially important given the limited income that most students have to work with before getting a job on graduation. Many students graduate with enormous debts and these can be a burden for decades after you’ve started working. Financial literacy skills enable better management of money and finances now so that you don’t begin your working life in a challenging position.