April 9, 2025
Written by: Isabelle Jones | Lifestyle Editor
According to Business Insider, the average debt an American owes is $104,215 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt and other debts like personal loans. Now is the time to develop positive financial habits. The transition to managing personal finances can be challenging, especially when one is faced with limited income, rising tuition costs and mounting debt. Understanding the basic concepts, such as budgeting, saving, managing debt and investing not only empowers students to make informed decisions, but also helps set the foundation for a financially secure future. While many college students feel overwhelmed by financial obligations, building financial literacy during these formative years can provide them with the tools to take control of their finances, reduce stress and avoid common pitfalls like excessive debt. By prioritizing financial wellness, we can lay the groundwork for a successful and independent financial future, by ensuring that we are prepared to manage the complexities of post-graduate life.
First things first —what is financial wellness? It’s understanding and managing one’s financial situation effectively and making informed decisions that align with one’s personal goals and values. Essentially, being in control of one’s finances in a way that supports overall well-being and allows one to live their life without excessive financial stress.
In order to improve our financial wellness, we need to be financially literate. Being financially literate can help equip one with the knowledge and skills needed to make informed financial decisions that can significantly impact one’s life. Financial literacy is the ability to understand and effectively use financial knowledge and skills to manage money, make informed financial decisions and achieve financial goals. Some of the knowledge gained when becoming financially literate includes understanding how to create a budget, save for the future, invest wisely and how to avoid relying on others or credit for financial stability.
The biggest way that one can help contribute to their financial wellness is through everyday budgeting. Tracking income and expenses gives one more control over their money. Especially for students with a limited income, without a budget, it’s easy to overspend or not realize where one’s money is going. Tracking one’s income in school isn’t just that monthly paycheck, it also includes money from one’s parents, scholarships, grants and side hustles. One also needs to understand the difference between fixed and variable expenses. Fixed are regular, consistent costs relating to tuition, rent, utilities, internet, insurance and subscription services. On the other hand, variable expenses fluctuate each month, which include bills like groceries, entertainment, clothing, transportation — gas, public transportation. It’s important to note what is a “need” and a “want.” There are many times where I have thought to myself, “oh my gosh, I need this” when in reality, I could live without it. As we’ve turned into a hyper-consuming society, it’s important to be mindful of how we spend our money. There will be times where we need to tell ourselves “I don’t need that” and ask “will I still be thinking about this tomorrow?” There are many reasons to convince ourselves that we supposedly need a certain object, but we have to prioritize what’s important. Paying our bills is more important than going out with friends. Buying groceries is more important than buying the latest micro trend. Prioritization helps to avoid costly mistakes like overspending, increasing unnecessary debt and financial scams.
The more one understands how money works, the less likely one is able to fall victim to financial fraud or scams. In today’s world, one will face scams left and right. As technology continues to advance, it’s becoming easier to fall for a scam. The latest scam of 2025 — so far — is AI scams with fake and cloned voices that can pose as family, friends, employers and even one’s own bank. As artificial intelligence evolves at a rapid pace, generated and altered voices can mimic real accents that can feel as if one is talking to a real person. Unfortunately, many fall for these financial deceptions, resulting in long-term consequences. Failure to recognize red flags, identify fraudulent schemes, and participating in risky investments can lead to one entering a never ending financial hole. Without financial literacy, it’s easy to fall into the trap of living paycheck to paycheck, relying on credit cards and neglecting long-term saving. A solid understanding of personal finance ensures you can make decisions with confidence, living within one’s means, build emergency savings and play for future goals.
One of the biggest financial drains on one’s emotional health is student debt. Majority of students leave school with at least some debt — student loans, credit cards, personal loans, etc. It’s important to alleviate this problem as soon as possible. When it comes to just the student loans, one needs to understand how much is owed, the interest rates and the repayment terms. When it comes time to start the payment process, set the amount to minimum payment. Be sure to pay more than the minimum amount. The minimum payment is just paying off the interest on the loan, it’s not actually making a dent into what is actually owed. When it gets close to graduation, it’s important to remember to refinance one’s student loans. This will help to get a lower interest rate and more manageable monthly payments. Another way to help with financial wellness is to work part time while in school. Money from a job can help to cover living expenses and reduce reliance on student loans and credit cards. Just a few hours a week can make all the difference.
There are other tips one could take to manage their finances in college.
Start saving early — Putting money into a savings account for future goals or emergencies is a good habit to develop. Try to save up to nine months of current expenses. This will ensure that one has enough money to use in case of an emergency, layoffs or any other situation that may arise.
Learn more about financial aid options — Maximize financial aid knowledge by visiting the financial aid department. Look for scholarships through the “Scholarships” tab on Western’s Portal.
Keep track of one’s credit score — Building and maintaining good credit during this time is crucial, as it determines future outcomes for other financial decisions such as renting and getting a car loan.
Set financial goals — This could be as simple as paying off a certain amount of debt, saving money for a trip or building an emergency fund. Having specific financial goals will keep one motivated and focused as they work towards completing other life goals.
Financial literacy empowers you to make wise financial choices, avoid common pitfalls and achieve long-term financial goals. When one understands their financial situation and knows what steps to take, one will feel more confident in their ability to handle whatever comes their way, from unexpected expenses to long-term planning. In a world where financial products and services are increasingly complex, being financially literate is essential to navigating life successfully.
Contact the author at howllifestyle@wou.edu
