Saving and Spending (Finding Balance as a Student)

As a student, managing your finances can be a daunting task, often marked by constant tug-of-war—continuity between saving and spending. For students and parents alike, it is important to understand the delicate balance between these two financial aspects. This article will explore the importance of saving and spending wisely, and offer tips and advice to help students and parents succeed on their financial journey.

The Importance of Financial Literacy for Students

Financial literacy is an essential skill that every student should have during their education. It’s not just about balancing a cheque-book; it is an understanding of the complexities of financial management, budgeting and the long-term impacts of financial decisions. Parents can play an important role in instilling these values ​​early in their children’s lives. Here are some important aspects of financial literacy for students:

1. Setting a budget: Creating and maintaining a budget is the foundation of knowledge of finance. Students must understand the concepts of income, expenses, and how to allocate resources effectively. Parents can help by teaching their children how to budget and track spending.

2. Savings: Encouraging students to save a portion of their income is necessary. Whether it’s a part-time job or a stipend, setting aside money for future needs or emergencies is an important lesson. Parents can guide their children on how to set savings goals and open savings accounts.

3. Spend wisely: Impulse buying and reckless spending can lead to financial problems. Students must learn the importance of distinguishing between wants and needs, prioritising spending, and making informed purchasing decisions.

4. Understanding Credit: Students need to understand the basics of credit, such as credit scores, credit cards, and loans. This knowledge will prepare them to borrow responsibly and manage credit effectively.

The Balance Between Saving and Spending

Finding the right balance between saving and spending is often the biggest financial challenge for students. Students need to enjoy their college years without the burden of debt, while also planning financially for their future. Here are some strategies for achieving this balance:

1. Prioritize needs over wants: Students should differentiate between essential spending (needs) and non-essential purchases (wants). It’s okay to indulge yourself from time to time, but it’s essential to make sure their needs, such as housing, food, and school supplies, are fully covered before spending discretionary money.

2. Emergency fund: Students are encouraged to establish an emergency fund. This fund will cover unexpected expenses such as medical bills or car repairs. Having a financial safety net can help students avoid debt in an emergency.

3. Set a savings goal: By setting specific savings goals, students can set aside a portion of their income for plans, such as studying extra, travel or making a down payment on a home. Saving for a specific purpose can make it easier to resist the temptation to spend recklessly.

4. Credit card usage limit: While credit cards can help establish a credit history, students should use them responsibly. Parents can help their children understand the consequences of high-interest debt and encourage them to only use credit cards for planned and budgeted expenses.

5. Student loan education: For college students, student loans are often a necessity. Parents should inform their children about different types of loans, interest rates, and repayment periods. Students should be aware of the long-term implications of their borrowing decisions.

6. Regular financial check-ups: Regular reviews of financial goals, budgets, and spending habits are beneficial. Parents and students can discuss their progress, make adjustments, and solve financial challenges together.

The Role of Parents in Financial Education

Parents play an important role in helping students balance saving and spending wisely. Here are some ways parents can support their children:

1. Lead by example: Parents should model responsible financial behaviour emphasising the importance of saving and living within one’s means.

2. Open dialogue: Create a safe and open space for discussions about money. Please encourage your children to ask questions, seek advice, and share their financial concerns.

3. Teaches practical skills: In addition to theoretical knowledge, also teaches practical financial skills such as bill paying, banking, and online money management tools.

4. Help make important decisions: When it comes to making important financial decisions such as choosing a college, taking out student loans or investing, parents can provide valuable advice.

5. Financial Responsibility: As students grow, gradually encourage financial independence. This helps them learn valuable lessons through real-life experiences.

Conclusion

Balancing saving and spending is a lifelong skill that students should practice from an early age. The importance of financial knowledge cannot be overstated as it empowers students to make informed money decisions and secure their financial future. Parents play an important role in this process, guiding their children, teaching them financial principles, and cultivating a responsible attitude toward personal finances. By working together and emphasizing financial education, parents and students can ensure a successful journey to financial security.

Article by AbdulRasheed Bayode-Raji

Business Studies Teacher

Canadian Bridge Academy Abuja