Financial Literacy: What You Need to Know
When we hear the word “literacy” we think of reading, and with anything that we read, there is a beginning, middle, and end. Financial literacy for college is no different. Determining what you need to know about financial wellness in college has to start with doing your research prior to getting into college and figuring out how you plan to pay for it.
Next, you must determine how you’re going to maintain your daily expenses amongst paying for college and other things for the duration of your college career, namely, the middle of your financial narrative.
Lastly, and especially if you have student loans to pay back, you must determine a plan of financial action going forward from college that will allow you to establish a healthy and mature financial lifestyle that accommodates for the next phase of your life. It is in working through each portion of the greater whole towards your financial future that you will individually determine what resources you need to achieve your goals.
What is Financial Literacy
Lifting off from high school and diving into the next phase of college life seems daunting, and this is especially true on the financial side of things because the likelihood is, you’ve never had to completely financially support yourself up to that point (I write this knowing that there are exceptions to this rule). With that being said, paying for college is intimidating when you generally see that large five or six-digit number for tuition. However, with the right financial literature, you will actually find that paying for college is not as terrifying as it seems. And essentially financial literacy is an understanding on how to manage your personal finances, like earning money, paying your bills, as well as establishing financial goals and a method to achieve them. And if you have a goal to go to college, you probably will need to find a way to pay for it.
Paying for College
As a high school or college student, the first step, as any guidance counselor would tell you, is to file the Free Application for Federal Student Aid (FAFSA®). This is a necessary form for most to get to college because it allows you to apply for a plethora of financial aid awards (like federal, state, and school grants) and federal loans all in one form. Financial aid may not cover everything, but, in many cases, it is the biggest sum of money that a student will receive. And of course, the most important part of financial literacy in paying for college, be smart and wise when it comes to borrowing those student loans. You will have to repay them, and you want to make sure you can afford them!
As a result, it can provide a nice jumping-off point for you to determine where your strongest efforts need to be focused as far as scholarships go. Once you’ve filled out the FAFSA, you can then begin to research scholarships, work study, and grant opportunities that are available to you. Some great examples of some places to search for scholarship and award-type opportunities would be any of your local organizations (i.e. Ruritans, DAR, local banks, etc.), the ScholarshipPoints(SM) website, the Edvisors® website, and others like this. At this point in your journey, it is about the quantity of things you apply for. The more you apply, the more opportunities you have to win, and even small awards add up to your greater goal of comfortably paying for college.
Now that you have applied for FAFSA and scholarships you are eligible for, getting ready to start your classes is equally important. You now have a game plan for how you’re going to pay for school, but now how do you maintain daily financial life and balance with trying to keep up your studies and social life? Your financial literature here often shifts to the “classifieds,” whatever form those may take.
Get a Job
Many universities and colleges offer numerous on-campus job opportunities that pay well enough to maintain a comfortable social life while also being flexible with your student priorities. If a job is the way that you are going to go to maintain financial comfort in college, this is the direction I would advise going in simply because they are more understanding when you need to take a night off to study. And if you are given work-study as part of financial aid, keep in mind that you will need to earn this portion of your financial aid package.
Outside campus jobs often are able to get you more hours, but that comes with the sacrifice of flexibility and time to study, which then defeats the purpose of paying for college in the first place. If you do find one of these jobs, let your employer know you are in school and maybe even provide them with a copy of your class schedule who they know how to schedule you.
To find these jobs, look at different job boards on your campus, and job search websites.
Creating a Budget
Aside from all of this, budgeting your money is a good habit to get into, and not to mention it is essential tool to make sure you are personally financially literate. Another good habit you should establish, paying yourself by opening up a savings account. And the best way to do this, keep track of how much you spending. There are a lot of way to track spending, which include:
- Download a budgeting mobile app where you can track your purchases.
- Create a spreadsheet which tracks all your bills and due dates.
- Use the old school checkbook method.
- Track your expense and pay days on a calendar.
There is no right or wrong way to budget, as long as it works for you. And tracking is only half the battle, analyze your monthly expenses at the end of every month and prepare for expenses for the upcoming month (like books or trips, etc.). Where can you cut back to help ease any financial stresses, like being able to pay your bills on time? Maybe you should limit how much you eat out or go shopping. Doing these things will not only help you save money, but will give you a better understanding of just how important financial literacy really is. These are great tools not just for college students, but for everyone to remember.
Once you’ve graduated from college, you may not be faced with tuition, fees, and having to buy textbooks, but trust me, the bills and everyday expenses do not stop. Maintaining your budget is even more important now. Once you graduate, you will need to figure out how to start paying back your student loans, which can be an added stress if you are unprepared.
Often times, navigating through finances can be a struggle when it comes to maintaining money and a budget. You may need to seek out a financial advisor of some sort if you find yourself in this situation. This doesn’t necessarily have to be someone that you hire to help you to manage your finances. There are tons of resources through YouTube videos, articles posted online, and more done by financial experts that are super helpful. One such resource who serves as a great example of a financial expert is Dave Ramsey. He has written several books including the book Financial Peace.
Ramsey has a radio show and podcast that has helped thousands of people achieve financial wellness and peace. He has very simple methods for not only helping you gain financial comfort, but also exceeding on that by saving money without depriving yourself. He is my personal favorite financial advisor to turn to, but there are many others out there like him who have books, internet sources, and more that comprise the literature that your financial efforts need to turn to as you cast off into your adult livelihood.
More than anything, financial literacy cannot be achieved unless you reach for it and seek it out. If you don’t, then you will not achieve the financial literacy and comfort that you desire. So with that, start your journey, do your research, and find that financial comfort wherever it may find you in life.