Importance of Learning Finance for Students

As a student, we tend to have a perception that finance knowledge is only necessary for elders who have financial responsibilities towards their family, such as meeting large goals like marriage, buying a house, etc., or people who have a decent amount of money with them. We, students, do not earn and hence cannot participate in finance-related activities such as stock market investing. But is it true? Absolutely not, as you explore this article further you will get to understand the importance of learning finance. Let us first understand what we refer to when we use the word ‘Finance knowledge’. As a student, you can understand Importance of Learning Finance for Students as something related to money-related knowledge which deals with earning, spending, saving, and investing. It would help you to make smart decisions regarding how to spend effectively, how much to save, how to invest saved money, how to take calculated risks, etc. 

Benefits of Learning Finance

There are numerous benefits that you get after learning finance. Some of them are as follows:-

• Career Advancement – Finance is an evergreen as it is required in every industry be it Technology, healthcare, business, etc. Good finance knowledge helps an individual to enhance their professional capabilities. Every company wants an employee who can understand finance and market trends, do well in financial planning, and use all these skills to make the best decision that favors the company. 
• Wise Investment Decision – Now let’s suppose that you are a science student and do not want to make a career in finance then why do you require to have financial knowledge? The answer is an investment decision. No matter what you do, you need savings and that saving is also not enough, you need to invest it. Though you can invest through a broker,  they charge a high commission. If you have investment knowledge you can channel your savings more effectively and gain massive returns through your investments. This knowledge would also help you in risk management. 
• Financial security and stability – It can help you to achieve financial security and stability as it would give you knowledge on building emergency funds, how to avoid debt traps, and how to plan effectively for major events such as marriage or a house. This would result in a better secure future. 
• Contribution to society – Good financial knowledge would not only help you to grow personally as well as professionally, but also it will contribute a lot to society as consumers would be knowing their rights which would lead to ethical business practices. Also, these people can contribute to discussions about economic and financial policies and regulations. 
• Empowerment and Independence – It would enable you to make effective choices that align with your goals. Also, these people do not easily fall into scams and unethical financial practices.
• Economic Awareness – It would help you understand the impact of economic policies, market fluctuations, inflation, interest rates, etc. so that you can strategize your financial planning according to the micro and macroeconomic scenario.
• Entrepreneurship Endeavours – If you want to start your entrepreneurship journey, then finance knowledge can help you in taking the most accurate decisions as you will be having an understanding of how much funds you need and from which source you should arrange these funds.

Steps to Develop Knowledge in Finance Domain

 After knowing the importance of learning finance, the next question that comes up in your mind is how can I get that knowledge? By the below-mentioned steps, whether you are a beginner or an intermediate, or an advanced learner, you can start your finance learning journey and excel in it.  

• Start with the basics. If you are not from a commerce background, we highly recommend you first clear your basic understanding of the most common terms used in finance such as assets, liabilities, net worth, etc. 
• Then you can start getting knowledge on financial concepts such as budgeting, saving, time value of money, etc. 
• After these two steps you will be having basic knowledge and then you can opt for a finance-related course either online or offline. 
• Then you can start learning about investments. You can refer to finance books and online resources. 
• There are many financial management apps available to track your expenses, set financial goals and monitor your progress. 
• You can try simulators for understanding the market better. Also, develop a habit of reading financial news and referring to market trends. 

Warren Buffet is currently the 6th richest person in the world who had gained massive wealth through stock market investments. He highly encourages students to start investing in the stock market from a very young age to take advantage of the compounding effect. 

Most Popular Budgeting Rule

In the finance world, the most prominent rule used in personal budgeting is the 50/20/30 rule, which says that you should divide your income in such a way that 50% goes for needs, 20% is used for saving purposes or emergency funds and 30% is used for wants.

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