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How Important Is Financial Competence to Students?

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Many students, after they graduate from school and even university, face the fact that much of the knowledge that they received during their studies will never be put into practice, and many important concepts were missed in the learning process. We are required to know and apply many skills, in particular financial competence or literacy. But how should students know about this? What does this term mean? How to put it into practice? What does it consist of? In this article, we will try to understand how important this is for the student.

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What is finance?

First of all, let’s look at the definition of finance. Finance is the management of money consisting of concepts such as saving, investing, budgeting, and borrowing. Finance can also be divided into three main categories: personal finance, which is how an individual deals with their money; corporate finance meaning financial decisions that are made to run a business; public finance which deals with the welfare of the public.

What is financial literacy?

To make a long story short, financial literacy is your ability to manage the money you have wisely. In order to do it, we have to know some fundamental concepts and rules of financial literacy. And that’s where most of our problems start because not all students learn about saving, investing, budgeting, and borrowing. And without financial literacy, it will be almost impossible to achieve the goal of any person: to create a trouble-free future for your family and yourself, save up for retirement and not wait for help from the government, live in a big and comfortable home without a necessity to pay debts for it for the rest of your life.

 

Why are more and more people financially illiterate?

The explanation is rather simple: very few students, especially those that are coming from families with low income receive financial education during high school, and at the same time they are expected to make serious financial decisions with long-term impacts on student loans and budgeting right after graduation. Just imagine, it’s not a simple question of whether you can afford, for example, paperwork by Speedy Paper help because you have no time to write an essay yourself, or maybe it’s better to stay with https://writepaperfor.me because they are also a reliable service. The amount of money spent in this case will be considerably low. But how can you expect someone without decent financial knowledge to understand what student loan conditions are better? Of course, we have access to that information, and we can google a lot, but if you don’t have fundamental knowledge, it is very difficult to set a firm foundation for their future financial stability.

 

What benefits does financial literacy have?

Every aspect of our life directly or indirectly is connected to money. They say that you can’t buy happiness for money, but you can buy good medical care, nice food, a comfortable apartment, and beautiful clothes. It’s impossible to imagine our life without spending money and earning money, and in order to enjoy vacations in some tropical countries, and create a saving up fund to use when you are retired, you have to learn financial literacy when being as young as possible. It will help you to avoid a lot of financial mistakes, like constant overdrafts and debts. You will learn how to invest money correctly, how to grow your savings thanks to it, and will never be ripped off.

You will be able to get what you want, to achieve your goals, and if for the moment you have no idea what you want, financial literacy can help you determine what your goals are in the first place. Financial stability in life, no spontaneous expensive purchases, and wise management of your money are all benefits that financial literacy gives you.

Also consider that when having some savings, you don’t have to be afraid of some unexpected situations in your life. In case of, for example, a medical emergency having a financial cushion will give you more confidence and you will not have to worry about waking up after the surgery and being broke. If you know how to use the money you currently have, you will be able to make it last as long as possible.

 

What can you do to improve your financial literacy?

Of course, the best way to do it is to enroll in business school, but unfortunately, not all people who want to can do it. That’s why you can use one way of getting information that is the cheapest and available to almost anyone. You can start reading. You can use your smartphone or go to the library and look for a collection of articles dedicated to financial literacy and how to build its foundation if you’ve never studied before. For example, look for articles about budgeting, savings, investing, or about the factors you have to consider when taking a loan. The second step you have to take is to try to apply the received knowledge in your real life. It doesn’t mean that from the very beginning, you have to decide which cryptocurrency to invest your money in. No, start little by little, for example, create your monthly budget and try to stick to it, or save a percentage of your salary (it can be even 20 dollars, the most important thing is to begin). The more you apply your skills, the more confident you will become about your financial future.

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