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
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 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.
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 four main areas of finance give a brief definition of each? ›
The four main areas of finance are corporate finance, investments, financial institutions and markets, and international finance. Corporate finance supports the operations of a company. Investments are the activities centered on buying and selling stocks and bonds.
What is the core principle of finance? ›
The concept of the time value of money is at the core of business finance principles. It recognises that money has different values at different points in time.
What is finance in principles of finance? ›
Five Principles of Finance. Finance is a broad term that refers to the processes that individuals and businesses use to earn, manage, and save money. Everyday financial activities include creating budgets, investing, selling assets, buying savings bonds, and taking out loans.
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.
4) Evaluate Alternatives
This is your chance to discuss the alternatives face-to-face and take necessary actions bearing in mind your current situation, financial standings and personal interests. If you have any concerns regarding your financial planner's recommendations, those can be altered and revised.
What is the first principle of finance? ›
Principle 1: Money Has a Time Value
Perhaps the most fundamental principle of finance is that money has a time value.
What is principle 3 in finance? ›
Standard on applying Principle 3
Making decisions about allocating resources between different options needs to recognise the values of stakeholders. Value refers to the relative importance of different outcomes. It is informed by stakeholders' preferences.
First Principles is a framework for getting to know the fundamental “Why's” behind a given business. Once understood, an Investor is in a much better position to consider the many other important factors (the “What's”) which can affect an investment's performance.
Which financial statement is most important? ›
Typically considered the most important of the financial statements, an income statement shows how much money a company made and spent over a specific period of time.
What are the basics of financial statements? ›
The three main types of financial statements are the balance sheet, the income statement, and the cash flow statement. These three statements together show the assets and liabilities of a business, its revenues, and costs, as well as its cash flows from operating, investing, and financing activities.
Which of the following best identifies the four main areas of finance? ›
The four main areas of finance (corporate, investments, financial markets and institutions, and international finance) are mutually exclusive topics.
What are the common principles of personal finance? ›
#5 The 70:20:10 Budgeting Rule
70% is for all your monthly expenses – including all your bills, food, travel expenses. 20% of your income should go towards your savings unless you have pressing debts to repay. These should come first if the below 10% doesn't cover all your repayments.
What are the most important personal finance principles? ›
Pay Yourself First
It's important to “pay yourself first” to ensure money is set aside for unexpected expenses, such as medical bills, a significant car repair, day-to-day expenses if you get laid off, and more.
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.
