Category: Personal Finance

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5 Tips to Become a Financially Smart Student

Published on October 7, 2021

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5 Tips to Become a Financially Smart Student

Do you have a class on “Financial Literacy for Students” in your high school curriculum? 

Have you ever discussed ‘personal finances’ with your friends? 

If your answer to these questions is NO, then it’s high time that you should get into the world of finance and start your journey before it gets too late. Student financial literacy has been trivialized for years now, but not anymore!

From a survey of 15-years old, 18% of the respondents revealed that they did not learn fundamental financial skills used in daily life like building a budget, comparison shopping, and understanding an invoice. 

High school is a great time to discover, learn and manage money and build habits that will help you to set up a solid financial foundation for the future. This is the opportunity to gain more clarity on your savings and spendings and work towards long-term and much bigger goals. 

Don’t know where to begin from? Don’t worry! In the next 5 minutes, you will have 5 awesome tips for you to become financially smart and secure your future.

Let’s get started:

  1. Open A Savings Account For Yourself
  2. Keep Track Of Your Personal Finances
  3. Start Investing And Believe In The Magic Of Compounding
  4. Check Out Financial Planning Apps And Resources
  5. Make Money By Monetizing Your Skills

1. Open A Savings Account For Yourself

Remember the good old days of piggy banks? The very step towards money management is having a place to save your money and make transactions, and having a bank account helps you out with that. As Warren Buffet says, “Do not save what is left over after spending, but spend what is left over after saving.” Focus on your savings first and keep your money secure in the bank. 

Consult with your parents to find the right bank to open a personal savings account. Don’t forget to activate internet banking services after opening your account. Legacy banks like HDFC Bank or ICICI Bank might be a great choice but if you’re looking for something cool, do check out FamPay and Google Fi. 

2. Keep Track Of Your Personal Finances

Sitting down and mapping a budget for yourself might seem a difficult task at first, but it is not. Think about basic high school expenses and utilities like stationery, books, class supplies, food, etc. These expenses are the buckets that need money from your savings. When you fill each of these buckets as much as required for each expense, you are assigning budgets to them.

Only when you create a budget for the money you have and track your expenses, you come to know where most of your money is going and where you need to cut down on expenditures. Not sure how to start with it? We can surely help you a little to track down your finances at every step of your life.

3. Start Investing And Believe In The Magic Of Compounding

Now that you have opened a bank account and set a budget, it’s time to invest your savings in the right way. The very first thing is to set an end goal- whether it is a short, medium, or long-term goal. Based on your requirement and the amount of savings, you can decide and set one for yourself. The sooner you start to invest money, the more interest you will build over time, and watch your money compounding.

For example, your short-term goal could be to start investing as early as possible, just like Warren Buffet. Similarly, a long-term goal could be applying to the best universities for higher education. 

4. Check Out Financial Planning Apps And Resources

According to a recent survey, 86% of high-schoolers requested money management classes in school rather than wait to commit financial blunders later in life.  There’s a lot more to money management and finances than installing the bank’s app on your phone or using a digital payment app. To find more about financial literacy for students, you will need to look beyond your textbooks. In fact, you can observe how your parents or elders exercise money management skills every single day. 

Get acquainted with books, blogs, and articles related to the finance world. The Psychology of Money (by Morgan Housel)  and Rich Dad Poor Dad (by Robert Kiyosaki and Sharon Lechter) are amazing books to start understanding the world of money. If you want to learn more about judicious investments, grab a copy of The Dhandho Investor (by Mohnish Pabrai) and The Intelligent Investor (by Benjamin Graham). 

Watch videos and listen to podcasts available on topics relevant to personal finance. Some of the most renowned podcasts include The Dave Ramsay Show and ChooseFi. If you’re looking for some millennial advice, do check out How To Money and Journey to Launch. 

Finally, make use of budgeting websites and apps like YNAB and Goodbudget to keep track of your money. Varsity by Zerodha also has a vast collection of financial lessons to learn from.

5. Make Money By Monetizing Your Skills

All these 5 tips have told you how to learn and manage money. But will you always borrow money for this from your parents? Who says you can’t build a source of income while in school? 

There are many advantages of working while in high school. If you have any skills, i.e. sketching, painting, writing, etc. you can show them to the world and build your personal brand. If not, you can try learning and gaining expertise in a new skill and then monetizing it. You can take up internships or part-time jobs to pursue your interests along with school and work. Or if you choose to work only during summers, you can make the best of it by doing extra shifts. Along with money, it will also help you to gain some work experience while still in high school.

Summing Up

Just as one doesn’t learn mathematics in a single day, gaining financial literacy needs some time as well. According to Guidant, one in four parents reported that they almost or never talk to their kids about household finances. Neither does your school give you complete visibility on financial literacy. But you don’t have to worry anymore!

Join the Smart Money Camp to learn more about money management, setting up budgets, and exploring more about the stock markets. It’s the perfect financial literacy course for high-schoolers to acquire financial knowledge and skills for the future. 

So, what are you waiting for? Hop on and set your steps in the world of finance right away! 

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blog Personal Finance | 5min Read

Importance of Financial Literacy for a high school student

Published on October 3, 2020

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Importance of Financial Literacy for a high school student

Financial literacy is critical for everyone at every stage of life. It forms the basis through which many of our basic necessities are met. At TheBigRedGroup we feel that high school students should get on this journey a lot sooner rather than later.

Culturally as compared to some of the western cultures and countries – young adults in India are protected from the realities of life and by the time they go out to the real world and face challenges regarding management of their own finances, it tends to be a tad too late.

Given the landscape, we feel it is crucial that one actually learns this skill even before they finish high school.

What It Means To Be Financially Literate

A financially literate person can understand and use financial skills. Financial literacy is not just going to the store and deciding if you have enough money for your purchase.

To be financially literate, you need to understand how to manage your finances, budget, and how to invest wisely.

Knowing Your Money Matters

When you are financially literate, you are less susceptible to fraud and scams. You can live your life comfortably and reduce the amount of stress that financial dependence brings with it.

Financial literacy will help you achieve your goals, fulfil your dreams, help plan your future, stay stress free during unforeseen incidents and emergencies and retire peacefully.

Being financially literate will also assist you in staying debt free and manage other aspects of your life.

Using Money

Time and again we come across the same struggles that young adults go through immediately after graduation or at the start of their careers.

Using money means more than just understanding how to make cash purchases.

It is important to track transactions and live within the means of your income in the beginning a lot more than as you start progressing in your career.

Learning about the various financial products such as loans, insurance, investment opportunities, different asset classes, etc. really help in improving your financial literacy..

You will need to know how to make a household budget, learn how to manage and pay off debt, and look at the pros and cons of various investment products on the market.

You will also want to evaluate credit cards to determine the best card for your needs. You can ensure that you are not accumulating debt that will be difficult to manage later on down the road.

Lack Of Financial Literacy

Financial literacy is a skill and if you do not learn this skill,  there can be issues down the road.  It is more likely that you will attain debt that you can’t pay off or that you are consistently struggling to make your ends meet.

Things can spiral from there, causing poor credit, bankruptcy, housing foreclosure, or other unforeseen negative ramifications.

How To Learn Financial Literacy

You can take steps to learn how to manage your money and spend it wisely without falling into the debt trap.

1. Make a budget – No matter what you do, it is crucial to track the money that you receive versus the money that you spend.  There are many ways to do this, but an Excel sheet may be one of the easiest.

In the sheet, include any income that you receive and make a note of your expenses. At a younger age, it may be as simple as going to a movie each week with a group of friends.

As you get older, it will include other expenses like rent, car payments, insurance, payment of utilities, etc.

2. Make a habit to save – Saving funds is crucial especially in India, where unlike rich countries, the government is incapable of providing a safety net to its citizens.

Set a savings goal – maybe there is a new video game you want. Decide how much money you can put away each week or month toward that goal before you sort out the rest of your money for other expenses.

As you get older, the goal may become more extensive.  Eventually, you will want to save for a car or a house.  But, starting small teaches you how to do it so that you can reach your goals one step at a time.

3. Manage your debt – It is not a good idea to ask your parents for an advance on your allowance or to be paid for chores you have not yet done.

Taking advances is how you accumulate debt.  But, there are certain circumstances you may not be able to avoid.

Your favorite band will be playing live, and you need to get tickets as soon as they go on sale, so you do not miss out.

If you take an advance of money, make sure you have a solid repayment plan.  Work the repayment into your budget so that you pay a certain amount each week until the debt has been repaid.

You have to remember that your parents may not charge you interest on a loan, but as you get older, you will have to pay interest on borrowed money.  The faster you pay off the debt, the less you will have to pay in interest.

4. Plan for Emergencies – Remember that concert you wanted to attend?  And you had to borrow money?  What if you had a little money in reserve for an emergency or a special event?  Along with saving, you could also set a little aside for such situations.

Again, it may not seem as important when you are younger but consider a few years down the road. You have saved up enough to buy a car. With that, you considered expenses such as your insurance, the cost of a license, and fuel. But then you get a flat tire. Having some money in an emergency fund can take the stress out of such a situation.

Understanding Financial Terminology

Pay attention to the various financial terminologies when you are taught at school. Take interest for example –  When you start using credit cards and investing, interest becomes very important.

It helps you understand how much you will need to pay back when you take out a loan and how much you can earn when you start to invest.

Loans will have various interest rates with terms like simple interest, compound interest, amortized rates, fixed interest, variable interest, and prime rate.

Being educated on these terms before considering any loan through a financial institution is crucial.

Spend time while you are still young, educating yourself about finance. You will be glad that you can handle your money and make sound financial decisions.

Where Do I Start?

The best time to start is when you have any money to begin to manage on your own.  It could be an allowance or money earned doing small jobs.

Start by getting some assistance, making a budget, and then see how it goes.  It is not set in stone, so you can make adjustments to it as needed until it seems to be working for you. You can also join our Smart Money Camp – the financial literacy program curated exclusively for high school students.

Next, pay attention in classes when you learn about percentages and anything else that has to do with money.  Ask questions as needed!

Have more questions? Please ask them in comments and one of our experts will be happy to help you. Alternatively, share your observations/experiences with us so that it can benefit other students in the community.

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