From subsisting on a ramen noodle diet to working multiple jobs while in school, college students are notoriously cash-strapped. But while you may have to scrimp to make ends meet now, you may have a brighter financial future, and sooner than you think — particularly if you start adopting smart financial behaviors during your college years.

We can think of no better time for students to start building their money management know-how than during April’s Financial Literacy Month. Here’s what you need to know.

Defining Financial Literacy

In order to aspire toward financial literacy, we must first understand it. The President’s Advisory Council on Financial Literacy defines it as, “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.”

Unfortunately, while most Americans are committed to imbuing in students key competencies like reading, writing, and math, the teaching of financial literacy is woefully neglected.

Says Futurpreneur Canada, “Research studies across countries on financial literacy have shown that most individuals (including entrepreneurs) don’t understand the concept of compound interest and some consumers don’t actively seek out financial information before making financial decisions. Most financial consumers lack the ability to choose and manage a credit card efficiently, and lack of financial literacy education is responsible for lack of money management skills and financial planning for business and retirement.”

Why Financial Literacy Matters

The consequences of lack of financial literacy can be quite severe. According to Money Management International, “Today, a majority of consumers are experiencing some sort of financial difficulty causing a significant impact on their everyday lives. In fact, Americans carry more than $2 trillion in consumer debt and 30 percent of consumers report having no extra cash; making it impossible to escape the burden of living paycheck to paycheck.”

Conversely, becoming financially literate comes with a number of liberating payoffs in the form of not only knowing how money works, but also how to make it work for you.

But you don’t have to take our word for it when it comes to the value of financial literacy. Take billionaire investor Warren Buffett’s word instead. “Someone is sitting in the shade today because someone planted a tree a long time ago,” he famously said.

Three Tips for Improving Your Financial Literacy

While many people lack financial literacy, college students may be among the worst. In fact, according to a recent study by U.S. Bank, “Student Perspectives on Money and Finance,” not only do many college students not budget or save, but many can’t differentiate financial myths from truths. Meanwhile, just under half (49 percent) of college students gave themselves C’s when asked to grade their money management skills. Only 11 percent gave themselves A’s, while five percent self-reported themselves as failing.

Which begs the question: How can you start planting your own fruit-bearing financial tree?  These three tips can help.

1. Understand the importance of starting early.

There’s no better application of the expression, “Don’t put off until tomorrow what you can do today” than when it comes to money management. College students may not have a lot to save, but the earlier they start, the more time their money has to grow. Explains Time magazine, “Saving for retirement is about maximizing compound interest. Compound interest is interest that builds onto itself. Over decades, your original contributions will grow exponentially because of compound interest.”

Looking for more proof of the power of compound interest? Use this calculator from

2. Take a personal finance course.

Experts say kids should start learning financial literacy at home. However, the reality is that this isn’t happening. Says Carla Hindman, director of financial education at Practical Money Skills, “Parents are our children’s first teachers. But not every child has the same opportunities at home.”

Unfortunately, financial literacy may not be part of the typical high school education, either. But just because it’s not being taught doesn’t mean there’s no means through which to learn. Many colleges and universities are stepping up and and offering programs designed to education students on how to manage their finances, including must-do money management tips. And even if your school doesn’t offer financial literacy programs, you’re not out of luck thanks to the abundance of money management and financial literacy tools available online.

3. Commit to keep learning.

While college and grad school offer perfect opportunities to start learning (and applying) financial literacy, your financial needs will change over time — and so should your knowledge. Whether you’re looking to trim down your credit card debt or refinance a home, committing yourself to ongoing financial literacy can help you maximize your money through all of the phases and stage of your life.

We’ll leave you with these parting words from Buffett: “If you don’t find a way to make money while you sleep, you will work until you die.” We all know how much college students love to sleep — so why not figure how to pad your pockets while you snooze?

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