By Ryan Laspina
Senior Specialist, Red Flags and External Reviews at APUS
The term “financial literacy” is thrown around a lot to describe part of what makes a successful college student (and person in general), but what exactly does it take for one to be financially literate? Someone who is financially literate is knowledgeable about personal finances and how his or her decisions affect financial well-being. However, there is more to being financially literate than just understanding how finances work. The tips below will provide you with a handful of ways to make smart financial decisions.
- Create a budget.
This should go without saying. You must understand where your incomes are coming from, as well as understand where and when your expenses are being deducted. Budgets do not have to be complicated. Simply keeping your checkbook register up-to-date is a great way to understand the debits and credits within your bank account.
- Open a savings account (if you do not already have one).
Once you have the savings account, try very hard to put some money in it weekly or monthly, even if it is a small amount. A savings account may come in handy if you find yourself without income for a period of time.
- Project into the future for major purchases.
If you know you have repairs coming up on your car, make sure you already have money set aside for that. If you are self-paying at your university, make sure you have money set aside for tuition costs. Major purchases rarely present themselves without some forewarning. Make sure you are prepared for when they do show up.
- Plan for retirement.
Look into 401K offerings through your employer. Setting up a nest egg now will help you in the long run. Also, set money aside when you can. Instead of building up a rainy day fund, add to your”when I’m through with working” account. You will thank yourself when it comes time to retire.
- If you do not understand how to do your taxes, make sure you seek advice.
Tax preparers may charge a large fee for their services, but if you can find someone who is willing to help you for no or little charge, take advantage of their expertise. They may be able to help you find the best possible outcome each year.
- Protect your personal information and your credit.
At its worst, identity and credit card theft can ruin your credit. At its best, they are a major pain to have to correct. Always keep your credit card receipts and review your monthly bill for inaccuracies. Never provide personal identifying information (Social Security number, date of birth, full name) to any untrusted source.
Understandably, this list is not all-inclusive. There are many other ways to boost your financial literacy (including reading this blog weekly)! Before making a decision regarding money, think about how this decision could affect you later on down the road. It may be something as simple as deciding whether to take your credit card receipt from the cashier, but taking that receipt and cataloging it is a way to raise your financial literacy score.