Financial Literacy: An essential life skill that helps you through college and beyond

College might be the first time you’re managing money on your own. Whether it’s paying for books, handling rent, or deciding how much to borrow in student loans, your financial choices now can shape your future.

Understanding money management is one of the most essential skills you will ever learn to make your money count instead of pinching pennies. And you don’t need a finance degree to build strong financial habits.

What’s Financial Literacy?

Financial literacy means knowing how to manage money wisely. This includes everyday skills like budgeting, saving, and making informed decisions about spending, borrowing, and investing. It also means understanding important financial concepts such as interest rates, inflation, and reducing risk through diversification. Knowing these things will help you:

• Avoid unnecessary debt
• Build healthy financial habits
• Plan for a stable future
• Reduce stress

Five Ways to Boost Your Financial Literacy

1. Learn the Basics

Start by familiarizing yourself with terms like interest rates, credit scores, principal vs. interest, and loan repayment. Free tools like MyMoney.gov and Minnesota State’s Money Management website offer easy-to-understand guides for beginners.

Tip: Treat financial literacy like a class that will help you for life.

2. Create (and Stick to) a Budget

Your budget doesn’t have to be complicated. A basic plan helps you understand what’s coming in and what’s going out. Track your income (like a part-time job or financial aid) and your expenses (rent, food, books, fun money). Budgeting apps are a great tool to set up and stick to your plan.

Tip: Set aside a small emergency fund if you can. Even $100 can help when unexpected costs pop up.

3. Be Smart About Student Loans

If you need to take out student loans, borrow only what you need—especially from private lenders. Federal student loans often have better interest rates and repayment options.

Before borrowing, ask yourself:

• How much will I owe after graduation?
• What is the interest rate?
• When will I have to start repaying?
• Will my career help me pay this back?

Tip: Use the federal loan simulator to estimate your monthly payments.

4. Build Credit Wisely

A good credit score helps you qualify for better interest rates, apartments, and even some jobs. Start by opening a student credit card or using a secured card. Pay off your balance in full each month and never spend more than you can afford.

Tip: Paying a small recurring bill—like a streaming subscription—on time can help build a strong credit history.

5. Take Advantage of Campus and Community Resources

Many colleges offer workshops or online tools to help you build financial knowledge. Ask your campus financial aid office or student life center what’s available. Some even offer free financial counseling!

Tip: Don’t be afraid to ask questions—your future self will thank you.

Conclusion

Money might not be your favorite subject, but learning about it will give you more freedom and peace of mind. And remember—just like studying for class, financial literacy gets easier the more you practice. Whether you’re learning how to track expenses or planning for a big purchase, building smart money habits is one of the best investments you can make. You’ve got this!