Financial Literacy

Financial literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. Understanding the following topics will help you save money and achieve your economic goals.

Budgeting

The basics of budgeting are to form good financial habits and develop an awareness of spending. Taking the time to make a budget can help you make smart financial decisions today that help to reach your goals in the future. Setting up a budget is simple. You just need to take the time to get started.

Budgeting is important because:

It helps you meet your expenses and create plans to reach your financial goals.
It helps you develop a sense of control over your money.
It reduces your anxiety levels regarding financial and academic matters.
It can contribute to your creditworthiness.
It identifies where funds should be going versus where they were actually spent.

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Setting Goals

Establishing goals is a good way to start the budgeting process. Goals can be academic, financial or personal. Goals provide you with a context that allows you to better understand the benefits of saving and the long-term impacts of poor money management. Some examples of goals are:

Academic Goals
- Graduating on time (the length of time spent in school has significant financial impacts)
- Getting good grades while in school (these can lead to financial merit awards)
- Obtaining a certificate, degree or degrees
- Publishing one's work
- Becoming a leader in one's field
Financial Goals
- Short-term savings goals (placing a percentage of every paycheck in a savings account or accumulating minimal debt prior to graduation)
- Long-term savings goals (e.g., paying off a car within five years or saving for a down payment to purchase a house)
Personal Goals
- Establishing a career
- Choosing place of residence
- Tracking earning and spending

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Needs vs. Wants

In addition to budgeting, it is a good idea for you to create a needs vs. wants checklist. The combination of these actions is a good starting point for you to reach your short-and long-term goals. Needs are required for survival, and wants are things that may not be as necessary as you think. Deciding on what are needs and what are wants allows you to decide which expenses are necessary and which are optional.

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Banking

Local credit unions can be a good first stop as a banking option for you. Many offer low-cost features which are considered ideal for students. Financial aid and other income will likely be deposited into your bank account. You should be encouraged to use the "pay yourself first" method when creating your budgets. To pay yourself first means simply this: Before paying bills, buying groceries, or spending money on anything else, set aside a portion of your income to save. Doing so (easily accomplished via an automatic transfer from a bank account) is an important step toward creating financial security and personal wealth.

Ready to choose a financial institution to bank with? Here are some questions to ask:

Is the institution insured? (Banks should be insured by the Federal Deposit Insurance Corporation; credit unions should be insured the National Credit Union Association.)
Does the institution charge monthly fees?
Is a minimum balance or regular direct deposit required to avoid monthly fees?
Are users charged for using out-of-network ATMs?
Does the institution charge overdraft fees? Does it offer overdraft protection?
Are users charged fees for debit card use or online bill pay?
Is the institution easily accessible and open during hours convenient to the student?

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