Money basics for students

What it covers

1. Where the money goes A budget is just a list of what comes in and what goes out, sorted into needs, wants and savings. The point is not to stop spending; it is to see the pattern. Most people underestimate small repeated costs: a snack a day is a textbook a term. One useful rule of thumb is 50/30/20: about half for needs, under a third for wants, and a fifth saved or used to clear debt. The numbers are less important than the habit of looking.
2. Interest: money that earns money Interest is the price of using someone else's money. Save 100 at 5% a year and you have 105 after a year, 110.25 after two, because the second year's interest is earned on the first year's too. That is compounding, and over long periods it dominates: at 7% a year, money doubles roughly every ten years. The rule of 72 estimates the doubling time: divide 72 by the rate. Starting early matters more than starting big.
3. Debt: the same engine in reverse Borrowing runs compounding against you. A loan or credit balance at 24% a year costs about 2% a month, and if you pay only the minimum the balance barely moves. Two numbers tell you what a loan really costs: the annual percentage rate (APR), and the total you will have repaid by the end. Mobile-money and payday-style loans often quote small weekly fees that work out to very high annual rates. Debt is not always bad (a loan that pays for a qualification can pay for itself), but you should always know the rate.
4. Inflation: prices drift If prices rise 10% in a year, the same money buys 10% less; your savings lost value even though the number did not change. Inflation is measured by tracking the price of a fixed basket of goods (the consumer price index). It is why wages, pensions and savings rates are compared with inflation: a 5% savings rate during 10% inflation is a real loss of about 5%. Central banks raise interest rates to slow inflation and cut them to encourage spending.
5. Risk and the long run Higher expected returns come with more ups and downs; there is no safe 20% a year, and anyone promising one is a warning sign. Savings accounts are stable and low-return; shares of companies have historically grown more over decades but can fall by half in a bad year. Spreading money across many investments (diversification) reduces the damage any one can do. The single most reliable protection is time: the longer you can leave money alone, the less a bad year matters.
6. Scams and small print Pressure to act now, guaranteed returns, requests to pay a fee to receive money, and messages from "your bank" asking for a PIN are the four signatures of fraud. Legitimate institutions never ask for your PIN or full password. For any contract, read the fee section and the exit terms before the headline rate. If an offer only makes sense if you recruit others, it is a pyramid.