Becoming a student means we have to be smart about managing our money, especially when we are faced with situations that require choosing which financial option that won’t empty our wallets the most, and with the least possibility of risk along with the highest amount of benefits. Doing so, what knowledge do we have to opt for when we are stuck in this dilemma? To do so, we have to learn about financial literacy.

    Financial literacy is a combined set of knowledge, skill and belief which influences one’s attitude of financial decision with the goal of achieving financial prosperity. For example, it is similar to budgeting or money management skills. People sometimes lack the awareness of what financial literacy is and how to apply it, which causes them not to know where their money goes. In Indonesia itself, the level of financial literacy continues to increase from year to year, despite it, the level of financial awareness among the Indonesian people is still less than 50% (based on a survey conducted by the OJK on 2024), which means that half of Indonesians are not yet aware of their lacking financial literacy.

    The question is: why is financial literacy so important? For example, being a student means you are in a constant situation where you are faced with the decision to spend your money, because when you enter college, you will be required, if not, forced to comply with spending your wallet to support your educational experience, such as: printing your books and modules in paper, gas and parking fees for your vehicle, groceries, and others. To not make yourself bankrupt, financial literacy is needed so you will be able to achieve financial stability by managing your finances and prioritizing the things that are much important.

    As a student, here are the things you need to know to improve your financial literacy, which is mainly by upgrading your budgeting and money management skills. First and foremost, we will talk about creating a budgeting plan with the help of online financial applications. Budgeting is a way to manage the money we have so that we are aware where our money goes, because sometimes, we spend our money without knowing what the goal of our expenses are. There are several ways to budget, one of the methods is to use a financial management application, such as Money Lover or Sribuu, which you can easily download on your device. These two applications are good for tracking our finances because of its simple user interface and minimal advertisements in the application. Furthermore, users can customize and recapitulate their daily spending as a personal report of their expenses.

    The second way of budgeting is to manually create a spreadsheet and divide it into 3 categories: basic needs, desires, and savings with respective percentages of 50, 30, and 20 percent. This method is recommended for beginners because it is not as restrictive and more flexible to do—yet, it is also crucial to always remember to input your daily expenses, from the largest and even to the smallest, such as parking fees and light snacks, so that your expenses can be calculated perfectly.

    Next is saving. To motivate your willingness to save, think of the benefits you can do with these savings. You will learn to be patient and not to rush when handling money, you will be able to buy the expensive things that you thought you wouldn’t be able to buy at first, and furthermore, you will be prepared when you are faced with unprecedented situations. To start this, the first thing is to save an emergency fund. A good amount of emergency funds is the amount of your basic needs multiplied by 3 to 6 months, everyone has their own share of necessities and the amount for these funds will differ to one another, depending on their lifestyle. Though personally, I suggest you collect emergency funds first because the future is impossible to predict, so it's better to be prepared for difficult situations.

    After your emergency fund reaches its target, then you can start to invest. You can make investments that will help you develop your self-growth, such as buying educational or self-help books and attending tutoring or skill sharing sessions, because this will help you discover your potential skills.

    These are some of the simple tips that can be applied in everyday life, be mindful of the money you spend every day. I hope this article can help you in terms of managing your finances, and of course, the most important thing is: don't forget to take action!

References :

1. Fernando, Jason. Financial Literacy : What it is, and Why it is so Important to Teach Teens Investopedia https://www.investopedia.com/terms/f/financial-literacy.asp#toc-why-financial-literacy-matters (2024).
2. Wood, Sarah. Financial Literacy: What College Students Need to Know. U.S News Improving Financial Awareness Among College Students: Assessment of a Financial Management Project (2022).
3. Statista. Financial literacy index in Indonesia from 2013 to 2022. https://www.statista.com/statistics/1369454/indonesia-financial-literacy-index/ (2024).
4. Otoritas Jasa Keuangan. Infografis Hasil Survei Nasional Literasi dan Inklusi Keuangan Tahun 2022.   https://ojk.go.id/id/berita-dan-kegiatan/info-terkini/Pages/Infografis-Survei-Nasional-Literasi-dan-Inklusi-Keuangan-Tahun-2022.aspx (2022).
5. Ibrahim, Zahid. [Ibrahim Zahid]. 2021, July 20. Caraku mengatur keuangan sebagai pelajar [Video]. YouTube. ://youtu.be/d897x30aPVU?si=dKf-r2VQFNckoqw9