Top 10 financial concepts every college student should know
The Hindu
Top 10 financial concepts every college student should know
Financial literacy is an indispensable skill that every college student should possess to navigate the complexities of managing personal finances and secure a stable financial future. According to a study by IBEF, only 24% of the adult population in India are financially literate, and there is a significant gap between urban and rural areas. From understanding compound interest to utilising student discounts and financial resources, the following concepts are crucial for financial success.
Creating a comprehensive budget isn’t just about tracking expenses; it is about crafting a financial blueprint. Allocate a portion of your monthly allowance, typically around 20%, for savings and investments. Break down your budget to cover essentials such as accommodation, transportation, and study materials, and earmark a reasonable amount for leisure and entertainment.
Harnessing the magic of compounding can lead to remarkable outcomes. Even modest investments, when compounded over time, can yield substantial returns. By starting to invest or save early, you can benefit from long-term growth due to the compounding effect.
Dipping toes into the stock market need not be overwhelming. Begin by investing in blue-chip stocks or exchange-traded funds (ETFs). These avenues provide exposure to diverse sectors while minimising risk. Indian students can initiate their investment journey with amounts as low as ₹500.
An emergency fund is a safety net that provides financial security during unexpected events like medical emergencies or car repairs. By establishing and maintaining an emergency fund, you can avoid the debt trap when unexpected expenses arise.
Embark on a gradual investment voyage by constructing a progressive portfolio. Initiate with stable options like fixed deposits and gradually allocate a portion to riskier assets like stocks or mutual funds. This tiered approach enables you to gauge your risk tolerance and reap potential rewards.
Exploring tax-saving avenues is a cornerstone of prudent financial planning. Capitalise on investment options like the National Savings Certificate (NSC) and Public Provident Fund (PPF) to reduce taxable income while securing your financial future.
Prarthana Prasad is a social media influencer, entrepreneur and a leading voice from the LGBTQ+ community. At a recent Diversity, Equity & Inclusion (DE&I) Conclave held in Bengaluru she opened up about how she is often a “token ticket” for the corporate world, increasingly contacted by brands for promotion during Pride Month.