A student guide to navigating the financial world
Becoming a student can be challenging, in a multitude of ways. It is the best years of your life, but also the most testing, especially when it comes to managing your finances. It is important to be prepared for what to expect when it comes to the four principles of finance: income, savings, spending and investment.
Income
When it comes to student loans, everyone is different. Different amounts depending on the financial status of your caregivers, and different methods of receiving them. Some students get a job to provide an extra income, some students don't apply for a student finance loan at all. The important thing to remember is you have to manage your income in the right way, that best suits you.
One of the best ways to manage your student income is to set it aside in a student bank account, set up separately to any other personal bank accounts. This way, you can focus on using this income for necessities such as food and hygiene products. If you get a job as a student or have any other income besides a loan, such as an allowance, perhaps think about setting aside this income into a different personal account. It might be an idea to use this income to spend on extra items you might want to buy - like that jacket you have wanted for ages but don't necessarily need! This is a good method of beginning to save your student loan, by using it to purchase necessities, which leads us on to the next financial principle: savings.
Savings
During your student years, the concept of saving can seem to go out the window! However, it is important to consider small ways of saving whilst at university.
Whilst you might have other bigger savings elsewhere, for future investments such as a house, or a car, small savings can also go a long way into achieving these longer term goals. Here are three tips for saving money at university.
Use budget planners - Give yourself a weekly budget for food shops and other necessities.
Railcards - Make sure you have a railcard, these are a huge money saving hack for those train journeys between home and university!
Student discounts - Make sure you always apply student discounts at checkout! Carry your student card with you for in-store discounts in many shops.
Spending
It is important to maintain a healthy balance between your student social life, and spending habits. The student life can require a lot of spending when it comes to going out, and enjoying the nightlife. This aspect of university should be welcomed, as it's hugely important to remember to have fun at university and make memories that will last when you graduate into the world of working. However, supermarket expenses must be considered amongst your social life.
The point here is, make sure that you build a strong relationship between handling your income so that you look after yourself, but also have fun! A balance is the key to financial stability at university.
Investments
Investments might be something you already have, or are looking to make in the future. It is important to make sure you become clued up on the best investments for your future whilst at university.
Think towards your future financial goals. Maybe you want to move out and start looking to rent or buy a house after you graduate, or maybe you want to save and make smaller investments for the time being.
Either way, consider which investments will help you best achieve your long term goals after your student life. The tips given in the previous sections will assist you in saving to be able to achieve these future investments!
FAQs
It is important to be prepared for what to expect when it comes to the four principles of finance: income, savings, spending and investment. "Following these core principles of personal finance can help you maintain your finances at a healthy level".
What are the 4 basics of financial planning? ›
Use this step-by-step financial planning guide to become more engaged with your finances now and into the future.
- Assess your financial situation and typical expenses. ...
- Set your financial goals. ...
- Create a plan that reflects the present and future. ...
- Fund your goals through saving and investing.
Information gathering (such as life goals, assets, liabilities, cash inflows and outflows, investment preferences) and analysis. Plan development (aligning resources to short- and long-term goals) Plan implementation. Plan monitoring, periodic review, and adjustment.
What are the 5 principles of finance? ›
A: The five major principles of finance are time value of money, risk and return, diversification, capital budgeting, and cost of capital. Understanding these principles is crucial for anyone working in finance or aspiring to do so.
What are 3 of the four principles that modern finance is based on? ›
These elements, often referred to as the four pillars of modern financial management, include planning, budgeting, risk management, and the automation of financial and business processes.
What are the concepts and principles of finance? ›
Perhaps the most basic of the finance principles, cash flow is the broad term for the net balance of money moving into and out of a business at a specific point in time. There are four types of cash flow that you should know: Operating cash flow: The net cash generated from day-to-day business activities.
What are the 4 C's of financial management? ›
Character, capital, capacity, and collateral – purpose isn't tied entirely to any one of the four Cs of credit worthiness. If your business is lacking in one of the Cs, it doesn't mean it has a weak purpose, and vice versa. Instead, the four categories come together to constitute purpose.
What are the four 4 process of financial management? ›
The Financial Management Cycle includes four phases that are essential for the overall evaluation of the financial management of any firm. The four phases are Planning, Budgeting, Managing Operations, and Annual Reporting.
What are the golden rules of financial planning? ›
You must save at least around 10% of your income every month. Holding the funds and investing them in liquid funds will help you. Liquid funds are a type of debt mutual fund that invests money in fixed income instruments like FDs, paper, deposit certificate, etc.
What are the core concepts of financial planning? ›
The main elements of a financial plan include a retirement strategy, a risk management plan, a long-term investment plan, a tax reduction strategy, and an estate plan.
8 Keys to Good Financial Plans
- Setting financial goals. ...
- Net worth statement. ...
- Budget and cash flow planning. ...
- Debt management plan. ...
- Retirement plan. ...
- Emergency funds. ...
- Insurance coverage. ...
- Estate plan.
The 3 Laws of Money Management
- The Law of Ten Cents. This one is simple. Take ten cents of every dollar you earn or receive and put it away. ...
- The Law of Organization. How much money do you have in your checking account? ...
- The Law of Enjoying the Wait. It's widely accepted that good things come to those who wait.
Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government. This guide will unpack the question: what is finance?
What are the five financial concepts? ›
To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.
What are the four basic principles of finance? ›
A student guide to navigating the financial world
It is important to be prepared for what to expect when it comes to the four principles of finance: income, savings, spending and investment. "Following these core principles of personal finance can help you maintain your finances at a healthy level".
What are the 4 primary components of a financial system? ›
The main financial system components include financial institutions, financial services, financial markets, and financial instruments.
What are the three pillars of financial success? ›
In conclusion, remember these three pillars: Cash Flow, Arbitrage, and Leverage. Embrace them, learn how to use them wisely, and let them guide you toward financial success.
What is the key concept of finance? ›
Finance is a term for matters regarding the management, creation, and study of money and investments. It involves the use of credit and debt, securities, and investment to finance current projects using future income flows.
What are the three principles of finance? ›
The investment principle determines where businesses invest their resources, the financing principle governs the mix of funding used to fund these investments, and the dividend principle answers the question of how much earnings should be reinvested back into the business and how much returned to the owners of the ...
What are the three most important concepts of finance? ›
3 Essential Financial Concepts You Should Understand
- Budgeting. This concept is often misunderstood as a way of keep you from spending money on what you want. ...
- Credit Score. ...
- Interest vs. ...
- The Importance of Financial Literacy.
Financial Planning for Individuals & Families
For individuals and families, we focus on asset/liability matching, tax-efficiency, and cost-effective planning throughout the four key phases of financial management: accumulation, distribution, preservation, and legacy. Plan to budget, determine investments, set goals.
What are the first 4 steps to financial success? ›
4 Steps to Financial Success
- Step 1: Know Your Numbers. Comparing your income to monthly payments will help you budget for savings. ...
- Step 2: Protect What's Yours. Insurance is the best defense against the unexpected. ...
- Step 3: Fund Your Future. How do you see your retirement? ...
- Step 4: Build Your Wealth.
In this blog, we explore the five key components of a financial plan and how they work together.
- Investments. Investments are a vital part of a well-rounded financial plan. ...
- Insurance. Protecting your assets—including yourself—is as important as growing your finances. ...
- Retirement Strategy. ...
- Trust and Estate Planning. ...
- Taxes.
