Financial Literacy for Student Entrepreneurs

Hello, Vetmily!

Welcome back to ‘Studentpreneurship Series with The Editorial Board', and this is Pelumi, your weekly wordsmith from The Editorial Board. 

The subject of our discussion this week is “Financial Literacy for Student Entrepreneurs.”

What does this entail?

I’ll tell you in a bit, but first, you should be aware that financial literacy is crucial for all student entrepreneurs. This is because it equips us with the knowledge and skills to effectively manage our finances, make informed investment decisions, and plan for long-term success. 

Without a strong understanding of financial principles, even the most innovative business ideas can fail due to poor budgeting, cash flow mismanagement, or unwise debt accumulation. 

We need to discuss this, because financial problems can significantly hinder our academic performance. 

And why are we ‘student entrepreneurs’ if we don't do well in school?

Before diving into the topic, let's do some quick puzzles and answer some questions to help develop our critical thinking skills. This way, you get to reflect on your current understanding of money and its management.

1. Let’s say you start a small business with 5000 Naira. After one month, you have made 2000 Naira in revenue but spent 1500 Naira on supplies and marketing. What is your net profit or loss for the month?
2. If you had to choose between a steady job paying 400,000 Naira a year, and running a business that could either earn you 600,000 Naira or nothing, which would you choose and why?

(Kindly type out your answers in the comments section.)

Reflect on these questions as we delve deeper and discuss what it means to be financially literate as student entrepreneurs. Your answers can reveal a lot about your risk tolerance, understanding of financial principles, and entrepreneurial mindset.

Why Should You be Financially Literate?

Not only do you need to know how to manage your money, but also how to make it work for you. 

Here are some reasons why financial literacy is essential:

• It Helps With Budgeting and Cash Flow Management

When you know how to create and stick to a budget, you can be ahee that your business can sustain itself. Understanding cash flow (the money moving in and out of your business) prevents shortages that can derail your operations.

• Financial Literacy Helps You Make Informed Decisions 

You get to know about reinvesting profits into your business or exploring new investment opportunities. It’s about understanding risks and potential returns.

• You are Able to Carry Out Financial Planning and Forecasting

It is not enough that you focus on the present; you must plan for the future. Financial forecasting helps you set realistic goals and make strategic decisions.

Tips To Note

1. Take advantage of online courses, workshops, and seminars on financial literacy. 
2. Familiarise yourself with financial tools and software, like Google Sheets and Microsoft Excel. These tools are useful for budgeting, accounting, and financial analysis.
3. Build relationships with financial advisors, accountants, and experienced entrepreneurs either on or outside of the school environment. Their insights can be invaluable.
4. Regularly review your business’s financial statements. 
5. Analyse your expenses to understand your financial situation.

Financial literacy is an ongoing journey, not a one-time achievement. As a student entrepreneur, continuously improving your financial skills can pave the way for business success and personal financial stability. 

Reflect on the brain teasers we started with, and use them to guide your financial decisions.

Remember, financial literacy is not just about knowing numbers; it’s about making informed, strategic decisions that align with your business goals. 

Start today, and watch your entrepreneurial journey flourish with sound financial practices.

Here Are Some Steps You Can Take To Achieve Your Finance Goals:

1. Set a financial literacy goal for the next month.
2. Use saving apps like Piggyvest and Cowrywise to meet your savings and investment goals. 
3. Join a group of student entrepreneurs where you get to share insights and learn from peers.
4. Keep a financial journal to track your learning progress and reflect on your financial decisions.

Embark on this journey with confidence, knowing that financial literacy is a powerful tool in your entrepreneurial toolkit.

That’s it, Vetmily!

We will meet again. 

Till then, kisses and hugs. 

Pelumi from The Editorial Board.