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 five principles of finance discuss each one and explain which principle is the most significant? ›
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 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.
Why are the principles of finance important? ›
Financial principles can enable business professionals across industries to gain a deeper understanding of their companies' financial health, how to measure created value, and how to best communicate with shareholders.
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 the first principles approach to finance? ›
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.
What are the four pillars within the financial services industry? ›
There are four key pillars to consider for a sound financial system to be put in place. Otherwise known as the 4Ps, these are pricing, profit, performance, and planning. So if you're looking to get your business onto solid financial footings, keep reading to find out more about each of these pillars.
What is the first rule of financial literacy? ›
1. Budget your money. In general, there are four main uses for money: spending, saving, investing and giving away. Finding the right balance among these four categories is essential, and a budget can be a very useful tool to help you accomplish this.
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.
• Communicate clear guidelines. • Increase understanding of Cost Principles. • Define common terms. • Provide information and resources. • Stimulate questions and critical thinking.
What are the six principles of finance? ›
There are six basic principles of finance: 1) the principle of risk and return ties higher risk to higher potential returns, 2) the time value of money principle recognizes money loses value over time, 3) the cash flow principle prefers earlier cash flows to later ones, 4) the profitability and liquidity principle ...
What are the five principle of financial accounting? ›
Although the guidelines for accountants are extensive, there are five main principles that underpin accounting practices and the preparation of financial statements. These are the accrual principle, the matching principle, the historic cost principle, the conservatism principle and the principle of substance over form.
Which of the following are principles of finance? ›
The six principles of finance include (1) Money has a time value, (2) Higher returns are expected for taking on less risk, (3) Diversification of investments can increase risk, (4) Financial markets are inefficient in pricing securities, (5) Manager and stockholder objectives may differ, and (6) Reputation matters.
