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
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 basic principles of financial planning? ›
Information gathering (such as life goals, assets, liabilities, cash inflows and outflows, investment preferences) and analysis. Plan development (aligning resources to short- and long-term goals) Plan implementation. Plan monitoring, periodic review, and adjustment.
What are the core principles of finance? ›
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 are the six principles steps in the process of financial planning? ›
Financial Planning Process
- 1) Identify your Financial Situation. ...
- 2) Determine Financial Goals. ...
- 3) Identify Alternatives for Investment. ...
- 4) Evaluate Alternatives. ...
- 5) Put Together a Financial Plan and Implement. ...
- 6) Review, Re-evaluate and Monitor The Plan.
Standards may differ from lender to lender, but there are four core components — the four C's — that lenders will evaluate in determining whether they will make a loan: capacity, capital, collateral and credit.
What are the 4 A's of finance? ›
Spending a few minutes each week to maintain your cash management program can help you to keep track of how you spend your money and pursue your financial goals. Any good cash management system revolves around the four As – Accounting, Analysis, Allocation, and Adjustment.
What are the 4 elements of financial planning? ›
Most financial management plans will break them down into four elements commonly recognised in financial management. These four elements are planning, controlling, organising & directing, and decision making.
What are the golden rules of financial planning? ›
Start with identifying goals like buying a car or planning for retirement. Categorise those goals into short-term and long-term. Goals that can be achieved within 1 to 3 years are essentially short-term. Goals that need a horizon of 3-5 years are called medium-term goals.
What are the 5 key areas of financial planning? ›
The five key areas of financial planning are (1) estate planning, (2) retirement planning, (3) self-protection/risk management, such as insurance, (4) investment planning, and (5) tax planning.
What are the basics of finance? ›
Finance basics include developing, managing, and analysing funds and investments. It comprises projected cash flows to fund current projects via credit and debt, securities, and investments.
Definition. Principal refers to the original sum of money that is invested, borrowed, or lent. It is the initial amount before any interest, gains, or losses are factored in.
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.
Getting Started: 4 Principles to Success
- Define your mission and your vision. Everything you do should be leading toward this. ...
- Address the “Why.” Why does your community exist? ...
- Assess the research and start planning. ...
- Communicate your plan to key stakeholders.
3 S of financial planning are Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and Systematic Withdrawal Plan (SWP).
What are the 4 components of financial? ›
For-profit businesses use four primary types of financial statement: the balance sheet, the income statement, the statement of cash flow, and the statement of retained earnings. Read on to explore each one and the information it conveys.
What are the 4 pillars of financial accounting? ›
Let's delve deeper into the four primary financial statements: the Income Statement, Balance Sheet, Statement of Cash Flows, and Statement of Changes in Equity, and understand their distinctive importance.
What are the 4 principles that are an integral part of financial accounting identify and describe? ›
There are four basic principles of financial accounting measurement: (1) objectivity, (2) matching, (3) revenue recognition, and (4) consistency. 3. A special method, called the equity method, is used to value certain long-term equity investments on the balance sheet.
What are the four pillars of financial institution? ›
A term used to describe the main types of financial institutions: banking, trust, insurance and securities.
