Many college students are not aware of how to fill cheques, check their credit history, how to deposit money in a bank, how to file their ITRs etc. as they are still dependent upon their parents to look after them. College is the first time usually they get independence. In college, they have to live freely, enjoy their freedom, so for this, they need to get a complete grasp of personal finance to be financially independent.
First, lets have a short glimpse of Personal Finance
Personal finance is the financial management which is performed by an individual or a family to plan a budget of annual expenditures and savings taking into considerations the various risks involved in it.
There are seven things every student should keep in their minds to be financially equipped.
Credit is an agreement of loan between two parties where one party allows his resources to another party wherein the second party is not bound to reimburse the first party immediately.
Eg. Credit cards facility provided by banks.
Many of us wonder about these mysterious plastic cards but they act as magic especially for students.
These are the cards issued by banks, enables the cardholder to borrow money to purchase anything like a merchant of goods and services against a promise to the issuer to pay the full money along with agreed charges later on. Paying credit card bills at the end of each month eases to build a good credit history. Good credit history access to great perks such as cash back or air miles (which is especially applicable to students staying away from home.
2) Savings and checking accounts
Checking accounts- a checking account is also called demand deposits which allow unlimited withdrawals and deposits.
Savings account-savings account is an account which allows limited no. of deposits and withdrawals of money unlike checking accounts.
So, if a student is applying for his student credit card, he must have either savings or checking account in his name. No student card is issued with the reference to their parents’ bank account.
Generally, when it is asked from the students whether they filed their income tax returns, a majority of the answer comes to a big NO. It is because they are relying upon their parents to file their income tax returns on behalf of them. But students will not always be exempted from paying taxes or having the privilege of getting it done by someone else as with the ease of E- FILING, there is no excuse on part of the students not to learn how to file their income tax returns.
4) Currency exchange.
Currency exchange means changing of own currency to some other country’s currency. When a student is going to abroad for travelling for the purpose of studying, he has to change his currency into the currency of the nation where he is going otherwise he will have to find ATMs in every hour for the exchange of currency which is costly as for every transaction a certain amount of fee is deducted which is quite expensive when we see in terms of our own currency. So it is not cost effective.
5) Online banking
In this digital era, every student is access to online banking facilities. Online banking is an electronic medium of payment which enables the customers to do transactions through financial institution’s websites. It’s an easy way of transferring money through smartphones, tablets etc. without going to banks. It is very necessary for students to get hands-on online banking because if they check their bank balances continuously, then they would probably try to minimize their expenditures which will be beneficial for the students later on.
6) Avoiding impulse purchases.
It can be very easy to fall into the trap of new found freedom of college life. Every student gets influenced to impulse buying of things which might not be useful. So it is very important for students to realize that they are spending monopoly money so that they might be conservative in their decisions.
7) Financial aid
Many students are aware of Financial Aid instruments such as FAFSA AND CSS but some might not. So it is essential for every student to grasp about the AID instruments to get financial relief and release from the dependency on parents to fill up the appropriate forms.
Lastly, if a student does at least 4 things mentioned above then he doesn’t have to bother about his own expenses and he will be financially strong, he doesn’t need to depend upon the parents for further miscellaneous expenses.
So if you are a college student then it’s your high time to start investing your money from today onwards.Credits:
Content :Aadya Jalan
Graphics :Pratik Dash