The world is changing even more. The Covid-19 pandemic exposed the vulnerabilities of the world economy concerning unexpected shocks. Job security isn’t guaranteed any longer. Pensions and 401-Ks are getting even harder to sustain.
During this period, one of the most affected groups has been college students, who have to deal with the educational paradigm shift. They also have to see into the future and prepare for a world where financial security is no longer guaranteed.
Adults and professionals have had to learn the hard way when it comes to dealing with the effects of the pandemic. With substantial lifestyle changes and tightening their belts, so to speak, adults have come into this new reality. Students, especially those in college, still have a bit more learning to do on how to lead a leaner and healthier financial lifestyle.
Financial education equips you with the knowledge to manage your money more wisely. Read on to find out why you, as a college student, shouldn’t postpone being financially literate.
1. There Are Fewer Job Guarantees Than a Decade Ago
Baby boomers and most millennials in the US and Western European countries, and developed nations like Australia had to worry little about securing a job. However, this has changed with the world moving toward a remote and gig economy. There are also numerous concerns that robots and AI will replace a good portion of the workforce by the year 2030.
With this in mind, students need to start learning early how to manage money and make the principle of compound interest work for them. Students, therefore, need to be taught about the change in financial paradigms and how to buckle themselves against any eventual shocks.
Students also need to appreciate the value of a side hustle, such as being a paper writer, in an economy where there is no longer the assurance of job security.
2. Competition Has Increased in the Job Market
Since the year 2000, the number of college graduates in the US has increased by as much as 28%, meaning that there is more competition for limited job spaces. This means that salaries are not only getting more competitive; companies are looking to hire the cheapest options, except in places like Silicon Valley or in areas such as research.
Therefore, a college student needs to prepare for inevitabilities such as job cuts and reduced salaries, even if the data states otherwise. Even with an advanced degree, you have no guarantee that you will remain salaried or employed. It is, therefore, wise to budget adequately for what you do make and live within your means.
3. There is Too Much “Hype” on Social Media
Social media has created a culture of fakeness, where most people try to show off a fake and unreal lifestyle to keep up with the Joneses. No one is more exposed to this kind of negativity than college students, who form the bulk of social media users.
With all the fakeness going around, students should gird themselves by not falling into the lifestyle trap, blowing their budgets on clothes, travel, and debauchery, instead of saving and investing. Just keep in mind that most of what goes around on social media is not real.
4. Real Wages Have Barely Budged in the Last Decade
While it is claimed that unemployment in the US has been at its lowest in the last 10 years, it should also be noted that real wages have barely budged. Indeed, inflation is also increasing and compounding, and life is getting even more expensive. Baby boomers and millennials don’t make nearly enough to retire comfortably, and the trend is expected to continue.
This means that disposable income is reducing while life is increasing. Students who are not taught the economics of the times will go out into the world, not realizing they are sitting on a ticking time bomb.
6. Credit Card Culture is Heavily Promoted
The average American has $6000-plus of credit card debt. Lenders are making it even easier for students to access credit cards as long as one can get a co-sign from a guardian.
The “work” culture of the old days, where one had to spend only what they earned, has been replaced with fast money schemes such as credit cards that have made cash easily accessible but expensive in the long run. Students are not taught to manage their debt, and thus it is expected that credit card debt will increase significantly.
College students in 2022 have to deal with all kinds and manners of shocks, from pandemics forcing lockdowns to a shifting global economy that cares little about their well-being.
Financial education isn’t taught practically in schools beyond business books. Thus, many students graduate having barely learned the ropes of how to save, make money honestly, and compound their investments.
With the tips presented in this article, you, as a college student, are in a better position to make solid choices concerning your financial future.