Being financially literate is a key step toward becoming an independent adult. It’s important to be informed about finances when moving onto college. Being financially literate can not only help you keep track of your spendings, but it can save you more money. It all starts with being financially responsible.
Being financially responsible is one important step to achieve financial literacy overall. Financial responsibility means making wise money decisions such as not spending above your means and saving for the future. It also means that you are smart about how you use your money. This helps you stay prepared when an unexpected financial situation needs taken care of.
Additionally, managing money will be an important task you do for the rest of your life. Learning how to pay your bills, how to apply for a credit card and how good credit can help you, and more sets you up for a well prepared future. Being able to handle money with ease is an empowering feeling. However, you don’t need to be a financial expert (and no one expects you to be!)
Strategies to help you be financially responsible
Good strategies include doing your research, making a budget, and setting financial goals.
Doing your research is helpful because it exposes you to different financial terms, giving you the information you need to become a savvy, financially independent adult. There is a wide variety of consumer-friendly resources available online for research. Using these resources can help you make better choices when faced with a major financial decision, such as applying for a credit card, taking a student loan or making big purchases. Ultimately, doing your research builds financial responsibility and therefore brings you closer to being financially literate.
Making a budget doesn’t need to be restrictive or harsh. Instead, view budgeting as a tool to helps you achieve goals. Once you figure out where your money is going, you can make a plan for how to proceed. Keeping a budget takes discipline, but the money you’ll save makes it all worth while. Additionally, technology is on your side. If you use a debit card, your bank statement keeps track of your spending.
Start your budget by establishing your income. Once you know how much you can spend, categorize your expenses. Expenses could include food, transportation, entertainment and more. Establishing these categories makes setting spending limits easier. It’s a good idea to pick a time each month to review how you spent your money. maintained your budget. Intermittently reviewing your expenses helps you to stay on track and reduce unnecessary spending.
Setting financial goals gives you something to work for and an incentive to continue to save. Start by establishing a worthwhile goal, like education, an emergency fund, or an important trip. Consider how much time is available to reach the goal. Break that larger goal down into smaller steps that can be reached in short time periods. For example, if you need $1,000 for a spring break trip in 12 months, concentrate on saving $84 a month. Little by little, you will reach your goal!
Ultimately, building financial responsibility as a college student prepares you for your future finances. This helps lead to the development of financial literacy, the foundation of your relationship with money.