When high school students approach me for career guidance and planning for their higher studies abroad, one of the key things I discuss with them is personal finance. I make it a point to educate them on the importance of savings and investments, also stress a lot on starting it young.
There are some mistakes I did as a student. I was dependent on my parents to fund my education. I should have been more independent but 30 years back no one educated us as students on building a fund for education. I always share my learning from my personal experience with my students. This practice also made me realise that there is a lot of change in how young adults think now, perceive their future and view money.
People generally believe that one should start saving only when they start earning. But instead of waiting until you get a job, a student can easily start investing monthly pocket money, monetary gifts received from relatives during special occasions and festivals in risk free instruments.
A tiny amount saved regularly can make a huge difference in the long run. One should get into the habit of saving from a young age as it can prove to be huge advantage.
Benefits of Saving Money for Students
Saving money allows a student to fulfil their dreams
When I ask students about the financials they want to earn in terms of income, net worth and investments, they do answer but their estimates are either too low or too high. They are not well versed with the concepts of saving money and its importance to fulfil their dreams such as owning a house or buying a car. It is important to make them understand that one needs to save adequately to fulfil their dreams and not be dependent on their parents to accomplish their financial goals.
Gets one into the habit to save early
Inculcating a habit to save early in life will help students in their future as well. After one finishes studies and starts to receive salary, it brings financial independence which could incite one to spend a lot, however if one is already in a habit to save it will help them not get intro trap of living paycheck to paycheck in future days.
Lets your money work for you
There are so many saving schemes which help your money grow. Even if a student puts some part of the pocket money in a savings account, the money grows as one earns interest. This is called compound interest which means that you earn interest not only on the money you put into the bank, but on the interest that your money has earned. There are also various online tools which helps one determine the future value of a monthly investment at various compounding intervals.
Helps pay off your student loan
A student needs got start paying back the student loans after the grace period of 3-6 months once they graduate. What if you don’t get a job in this time period. This creates undue pressure even more so if you are an international student. If one has savings, then one is in a better position to handle this situation.
Makes you secure if unemployed
Currently so many people across the world are being laid off without giving any explanation by top companies. In such a situation if one has the cushion of savings to fall back on it gives one time to look for a better job without compromising on the job profile. A fresher is more vulnerable to being laid off and thus saving always comes to the rescue.
Saving helps a student learn about various financial terms
When students learn to manage their own money by saving and investing, they learn about financial terms like Fixed Deposit , savings accounts, current account, equity, stock market etc. Knowledge of these financial terms build a strong foundation for one’s future money management.
To take a gap year
If a student has enough savings, they have the luxury of taking a gap year after they graduate to pursue a hobby or travel.
To pay for relocation expenses
It is not necessary that every company pays an employee to relocate. More so while they are hiring a fresher. A student fresh out of college gets his dream job but doesn’t have enough funds to relocate might have to give up on the offer too. One can always negotiate but why not be better prepared for such situations by saving early in life.
To finance further education
As a career counsellor, I have students coming to me wishing to pursue a post -grad degree but once they are made aware of the expected expense for the same have to give up on this dream.
There are so many students who do not have have enough money to support and thus have to start looking for jobs immediately after graduating. If the student has started saving early or making smart investments at an early age, then the student can fulfil the dream of doing the masters course immediately on completing his under grad degree.
To prepare for your future life
After a student completes education and moves to the next chapter of life, expenses and payments start to increase. And all this happens very quickly. So, it’s better to be prepared for the down payments, car payments, mortgage payments, insurance etc. Being prepared for emergency expenses will help you live your adult life well.
I hope that these insights help you to understand the importance of saving and making the right investments and you inculcate the habit to live a peaceful stress free life.