Becoming financially savvy is the best gift Ayan can give himself. The more he knows about money and what to do with it, the more in control and powerful he’ll feel when it comes to managing finances and making decisions independently.
In case Ayan has opted for a student loan or any other loan to get by in a foreign country, he must do his homework well. It is important that he uses loans wisely —on rent, tuition and books, not drinking and new clothes or fancy gadgets. He must realise that the credit card is not free money. He must have a clear pay-back plan in mind. Paying for his trip using his student credit card while having no idea how to pay it back is not a good idea. Instead, he must ensure that he can use a credit card responsibly, so that he is able to enjoy the benefits, like building his credit profile for cheaper credit in future. As a student, he would have access to a lot of discounts and even free things. He must look out for and capitalise on such opportunities.
Ayan might want to spend some time starting a side hustle, such as working in the research lab, tutoring his classmates in his favourite subject, teaching a language online or freelance writing or taking keyboard sessions online. Budgeting will help. Ayan can start with his income, including monthly take-home pay, income from the side hustle, or his monthly allowance from student loan or parents’ contribution. He must estimate his expenses by looking at his bank account or credit card statements of the past two or three months to see where the money is going. This will include both his fixed (needs) and variable (wants) expenses. The goal is to ensure that Ayan’s expenses are not more than his income. The one thing he needs to be very careful about is identity theft as students are typically considered a vulnerable profile. He must keep an eye on his online accounts and not disclose sensitive personal financial information to fraudulent callers and digital platforms such as emails, websites etc.
As a college student, Ayan is young and this is the right time to start building good financial habits. He must focus on giving himself a financial education, which will act as his base for making smart money decisions for the rest of his life. Developing good financial habits young is one of the best things you can do for your future.
(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
