When it comes to personal finance, a lot tips and budgeting maneuvers have already been highlighted. However, the most significant point (and the most neglected one) is that of financial literacy.
The notion of financial literacy and economic security for children has a positive correlation with their educational outcome. Secondly, by having a solid understanding of the finances, initiatives such as budgeting and managing student debt become easier in later years.
Impact of financial literacy on a student
The aforementioned assertion is not a vague assumption, but an inference that is backed by extensive studies. The Florida State University conducted a research project with the notion of financial literacy as the main component. One important highlight of this project was that student debt is not merely a result of the failure to properly budget, but rather a result of the lack of financial guidance.
Another valid point is that of financial literacy at students’ age translating to better financial outcomes in their professional lives.
Two important things that come to mind with this analysis are the changing economic paradigm and the enactment of an informed choice. Firstly, the recession had a trickledown effect on literally every individual.
The government was forced to bring in legislature such as the Budget Control Act of 2011, which also included cuts for education. Student grant programs were either reduced or modified. Now, a student well versed with financial jargon is in a better position to survive and prosper.
Informed choice and financial guidance
An ‘informed choice’ and how it relates to financial literacy is the second important factor. In the current era, attaining financial literacy is more convenient due to internet tools and consolidated resources.
When researching consolidated resources, the student money saving guide by Jon Fritz sheds light on financial decisions. From discussing the broader topic of tax deduction to the more targeted subject of financial aid, such guidelines can serve as an ideal resource for financial guidance.
More specifically, an informed choice is better not only as an academic attribute but also as an indicator of productivity in terms of employment. A student with better financial literacy can make intelligent choices on his/her own rather than over-dependence on peer advice.
Moreover, financial literacy in the case of a student evolves. It starts off with a combination of awareness and knowledge, which later adds skills and behavior to the financial repertoire of the student.
With the kind of technological revolution we are seeing, monetary systems are being revised. Financial products are becoming diverse, requiring appropriate knowledge for optimal usage. So, financial literacy for student means better range and accessibility of financial products and services.
For instance, student grants or research project grants help students not only to explore their academia with more diversity, but also to ensure better financial survival. Such grants can be easily obtained if the student has a decent rate of financial literacy.
A study conducted few years ago also revealed that the overall academic ability of student is strongly related to financial literacy, as are the student’s educational aspirations. So for parents, that is like killing two birds with one stone.