As a university student studying business, you are likely familiar with various subjects such as marketing, management, and economics. However, one of the most critical areas that can shape your future success is finance—both in a professional context and for your personal wealth creation. Having a solid understanding of finance doesn’t just apply to the world of corporations and businesses; it plays a vital role in how you manage your own finances, build wealth, and secure financial independence.

In today’s fast-paced world, a lack of financial literacy can have serious consequences. For business students, understanding finance is essential not only for a successful career but also for managing personal wealth and creating a solid financial foundation for the future.

Why Business Students Should Prioritize Learning Finance

Finance is the Backbone of Business

Regardless of the specific field of business you choose—whether it’s entrepreneurship, marketing, or operations, finance is fundamental to how businesses function. Understanding concepts such as cash flow, budgeting, investments, and risk management is crucial for making informed decisions that impact a company’s profitability and sustainability.

• For example, you might have the best business idea or marketing strategy, but without a grasp of how to finance your venture or manage costs, your idea may not come to fruition. Financial skills allow you to plan, allocate resources, and assess risks more effectively, which can make the difference between success and failure in the business world.

Improved Career Opportunities

Having a firm understanding of finance sets you apart in the job market. Employers in all areas of business seek candidates who can understand financial statements, analyze data, and contribute to a company’s bottom line. These skills are not only important for finance-specific roles such as financial analysts or accountants, but they also benefit positions in marketing, human resources, or even management.

Financial literacy can also give you a competitive advantage if you decide to pursue entrepreneurship. Knowing how to source capital, manage expenses, and invest in growth opportunities will be key to your success as a business owner.

The Connection Between Financial Literacy and Personal Wealth Creation

While learning finance is important for your career, it’s equally essential for your personal financial health. Understanding personal finance helps you make sound decisions that can lead to long-term wealth creation and financial independence.

There is a direct link between financial literacy and personal wealth. Studies consistently show that individuals with higher financial literacy tend to accumulate more wealth over time. For example, a TIAA Institute-GFLEC Personal Finance Index report revealed that individuals with high financial literacy are more likely to plan for retirement, have emergency savings, and invest in long-term financial assets. According to the study, financially literate individuals are 33% more likely to have an emergency fund and 25% more likely to invest in stocks compared to those with lower financial literacy.

Here are several reasons why financial literacy is crucial for personal wealth creation:

Budgeting and Saving

One of the foundational aspects of personal wealth creation is understanding how to manage your money through budgeting. By tracking your income and expenses, you can control your spending, save more, and ensure you have enough for essential costs like rent, tuition, and food. Proper budgeting also allows you to allocate funds toward savings and investments, building wealth over time.

• Without these skills, it’s easy to overspend, rack up debt, or miss out on opportunities to save. As a business student, learning how to balance a personal budget is a critical step toward financial independence. According to a FINRA Investor Education Foundation report, individuals who budget are 50% more likely to save for emergencies, demonstrating the link between budgeting skills and wealth accumulation.

Debt Management

Many university students graduate with significant student loan debt. Understanding how to manage and repay this debt is crucial for your financial well-being. Learning about interest rates, repayment plans, and strategies for minimizing debt can save you thousands of dollars over time.

• Moreover, managing debt wisely can improve your credit score, which will affect your ability to take out loans for major life events such as buying a house or starting a business. The National Financial Capability Study found that individuals with higher financial literacy scores were less likely to carry high-interest debt and more likely to pay off credit card balances in full each month, which positively impacts long-term wealth.

Investing and Compound Growth

One of the most powerful tools for building personal wealth is investing. Unlike saving, which typically involves putting money in a low-interest savings account, investing allows your money to grow over time through the power of compound interest. Whether it’s through stocks, bonds, mutual funds, or real estate, investing can help you accumulate wealth and meet long-term financial goals, such as retirement or financial independence.

• For business students, understanding the principles of investing is key not only for professional purposes but also for growing your own wealth. According to a University of Michigan Retirement Research Center study, individuals who possess higher levels of financial literacy are more likely to invest in stock markets, leading to higher wealth accumulation over time.

Risk Management and Financial Security

Part of personal finance involves managing risk through tools such as insurance and emergency savings funds. Life is unpredictable, and unexpected events like medical emergencies, job loss, or economic downturns can have significant financial consequences. By learning how to protect yourself from these risks, whether through savings, investments, or insurance—you can ensure greater financial stability.

• Building an emergency fund, for example, provides a safety net that prevents you from relying on high-interest debt when unforeseen expenses arise. Similarly, understanding different types of insurance, such as health or life insurance, can safeguard your financial future.

Practical Steps to Take While in University

As a business student, you’re in an excellent position to begin developing both your professional finance skills and your personal financial literacy. Here are a few practical steps you can take:

1. Take Finance and Personal Finance Courses
   Take full advantage of the finance-related courses offered in your business program. Many universities offer courses on corporate finance, investment strategies, and personal financial planning. These courses will provide you with the foundational knowledge you need to manage both business and personal finances.

2. Build a Budget and Start Saving
   Even as a student, you can begin building wealth by creating a budget, tracking your spending, and saving a portion of your income. The habit of budgeting and saving will serve you well throughout your life and career.

3. Learn About Investments
   Consider opening a low-cost brokerage account and start learning about investing. You don’t need a lot of money to get started, and many platforms offer educational resources to help you make informed investment decisions.

4. Stay Informed
   The world of finance is constantly evolving, with new trends, technologies, and strategies emerging regularly. Stay informed by reading financial news, following market trends, and keeping up with developments in personal finance.

Final Thoughts

As a business student, understanding finance is more than just a professional necessity—it’s a critical life skill that will shape your ability to create and manage wealth. Whether you’re planning to enter the corporate world, start your own business, or simply achieve financial independence, a solid foundation in finance will provide you with the tools to make informed decisions, manage risk, and grow your wealth over time.

Investing time and effort in learning about finance today will pay off in the future, giving you the knowledge and confidence to succeed in both your career and personal financial journey. Start now, and you’ll be well on your way to financial independence and long-term wealth creation.

References

TIAA Institute-GFLEC. "The TIAA Institute-GFLEC Personal Finance Index." 2023. Link.

FINRA Investor Education Foundation. "National Financial Capability Study." 2023. Link.

University of Michigan Retirement Research Center. "Financial Literacy and Retirement Planning: The Role of Financial Education." 2005. Link.

According to the Bureau of Labor Statistics occupational guidebook, employment in business and finance occupations are on a projection to grow faster than all occupations in the 10-year period 2023 to 2033.  Close to one million openings are expected each year due to both employment growth and projected retirements.  The median annual wage for business and financial occupations in May 2023 was a staggering $79,050 compared to $48,060 for all occupations.  

Personal finance advisors came in with the highest 2023 Median Annual Pay at $99,580 with Management Analysts coming in 2nd place with a median annual income of $99,410.  Both careers require a bachelor’s degree and financial advisors can get additional certifications to raise their qualifications such as Certified Financial Planner, Chartered Financial Consultant and Certified Financial Fiduciary to name a few.

A management analyst works with companies and recommends improvement strategies for a firm’s organizational efficiency.  A typical management analyst travels frequently to meet with clients and may work more than the typical 40-hour work week depending on the needs of their clients.  Additional to a bachelor’s degree, management analysts have several years of related work experience and have a proven track record of success in these companies.  The job outlook for this field is promising with an 11% projected growth from 2023 to 2023 which exceeds the average for all occupations.

Personal financial advisors meet with clients and provide planning and advising for their financial future.  Many of these individuals are self-employed.  These individuals also have a typical work week of over 40 hours per week and may meet with clients on the weekends or during the evening to accommodate their schedules.  A master’s degree and/or certification can improve an individual’s chances of demand for their services.  The job outlook for personal financial advisors is projected to grow 17% from 2023 to 2033 which exceeds the average for all occupations.

Both professions are on a promising track to continue to flourish over the next 10 years and it is notable the highest paid professions are from two very different business disciplines and show the vast opportunities in the business field.

References

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Accountants and Auditors, at https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm (retrieved September 27, 2024).