Beyond Business Education: Why is Financial Literacy Important for Students?

Key Takeaways

• Financial literacy is about understanding financial concepts in theory as well as applying them in real life, like budgeting, managing debt, and saving for the future. 
• Students who learn these skills early are better equipped to avoid costly mistakes and make informed choices as they transition into adulthood and their careers.
• A significant gap exists in financial literacy, especially among young adults. Many students graduate without a basic understanding of essential financial concepts like taxes, credit management, or how to create a personal budget.
• Closing this gap through better education and exposure to real-world financial situations is critical for empowering future generations.

Financial literacy isn’t just about balancing a checkbook or avoiding credit card debt—it’s the foundation for making smart, strategic decisions in every aspect of life, especially in business. 

Yet many students step into adulthood without even the basics, often struggling with personal finances before they ever enter the professional world. This personal gap becomes a professional liability. That’s why financial literacy must be treated not just as a useful life skill, but as an essential business competency. 

As the world of business evolves, so do the expectations. Employers, investors, and even consumers are placing more value on individuals who can interpret financial data, plan strategically, and make informed, confident decisions.

What is Financial Literacy?

Finance is a language of its own, and with a bit of study, it's not difficult to master. Financial literacy is the ability to understand, manage, and apply key aspects of personal and professional finance—from everyday money decisions to long-term planning. It includes skills like budgeting, saving, borrowing responsibly, and investing with intention.

But it’s not just about knowing what to do—it’s about thinking differently. Financial literacy is also a mindset that encourages proactive planning, critical decision-making, and confidence in the face of financial choices.

Financial literacy means more than learning financial concepts, but knowing how to use them: understanding the cost of credit, comparing student loan options, reading a pay stub, or building a personal budget. These aren’t abstract ideas—they’re essential tools for navigating early adulthood and future careers with clarity and control.

Key Components of Financial Literacy

While financial literacy is a broad concept, it’s grounded in a few essential pillars:

Budgeting

Budgeting is tracking your spending and being intentional with where your money goes. It’s the foundation of financial stability, helping you control overspending, live within your means, and allocate your income toward meaningful goals.

For students, this means learning how to build a realistic budget that reflects both fixed costs (like rent or tuition) and flexible spending (like dining out or travel). 

To get started, you can:

• Learn how to create a basic budget and choose a method that fits your lifestyle (like the 50/30/20 rule).
• Use mobile budgeting apps to simplify tracking.
• Practice sticking to your plan by reviewing and adjusting your budget regularly.

Saving

Do not save what is left after spending, but spend what is left after saving. – Warren Buffett

This quote captures the heart of smart saving: it’s not about leftovers—it’s about priorities. Building a habit of saving first, not last, is one of the most effective ways to stay financially grounded and future-ready.

Data shows that 54% of Americans have at least 3–6 months of expenses saved to protect themselves from unexpected costs like medical bills or car repairs.

Beyond emergencies, saving can help you mitigate debt when planning for big moments like getting a business degree, a car, or just a new laptop. The goal is to build a habit that lets you plan ahead, not play catch-up.

How you can strengthen your saving habits:

• Set clear goals (e.g., a vacation fund or future tuition payments).
• “Pay yourself first” by setting up automatic transfers into your savings account.
• Choose the right account—whether a high-yield savings account or a long-term goal-oriented fund.

Debt management

Debt is often part of life—student loans, credit cards, or auto loans—but it’s how you manage it that makes all the difference. Financial literacy teaches you how to borrow responsibly, keep track of payments, and avoid high-interest traps.

This means understanding how repayment works before taking out a loan, knowing the cost of credit card interest, and keeping monthly payments manageable. Smart debt management protects your credit and gives you more financial freedom down the line.

Tips for better debt management:

• Understand the difference between good debt (e.g., student loans) and high-risk debt (e.g., payday loans).
• Always pay more than the minimum when you can, and stay ahead of due dates.
• Know your credit card’s grace period—paying in full each month avoids interest entirely.

Retirement planning

It may feel early to think about retirement—but the sooner you start, the more your money can grow. Thanks to compound interest, even small contributions now can lead to major long-term gains.

Whether you're working part-time or just starting your career, setting up a retirement account like a 401(k) or IRA can better position you for a secure and flexible future. If you invest $200 a month starting at age 20, you could have over $3 million by retirement—just by being consistent.

Steps to begin your retirement planning journey:

• Open a retirement account through your employer or a trusted financial institution.
• Learn how diversification reduces investment risk.
• Track your contributions and set growth goals over time.

The Financial Literacy Gap

Despite its importance, financial literacy remains low globally, especially among young adults. Many leave school knowing how to solve for x, but not how to file taxes, manage credit, or understand a pay stub. The result? A generation of talented individuals underprepared for real-world financial challenges.

This gap is not just an individual issue; it has a ripple effect across communities, workplaces, and entire economies. Without a basic financial framework, poor decisions become more common, opportunities are missed, and risks go unmanaged.

In fact, only about 11% of OECD (Organisation for Economic Co-operation and Development) students are able to solve non-routine financial problems and demonstrate an understanding of broader financial concepts, such as income tax. As OECD Secretary-General Mathias Cormann emphasized, 

These results, combined with the increased incidence, complexity, and potential impacts of financial frauds and scams, highlight the need to better equip our young people with the knowledge and skills necessary to make safe and informed financial decisions.

By addressing this gap early on, we can better prepare future generations for the financial decisions they will inevitably face.

Importance of Financial Education

Closing the financial literacy gap starts with education that’s practical, accessible, and aligned with modern challenges. At HIM Business School, financial education isn’t an isolated course—it’s an integral part of the curriculum from day one. 

Students are introduced to core financial principles early in their studies, learning how to manage finances, understand economic principles, and analyze business data. These skills are embedded throughout the Bachelor of Business Administration program, ensuring every student develops real-world financial fluency.

For those who want to go further, HIM offers a finance major within the BBA. This track deepens financial knowledge in strategic planning, business investment, and market analysis—preparing students to lead in finance-focused careers or launch their own ventures with confidence.

Whether assessing a business plan’s financial viability or tracking shifts in global financial markets, students gain the real-world financial insight that modern employers expect. By building these capabilities early on, HIM ensures graduates are not just financially literate—they're financially fluent and business-ready.

Starting early

Financial literacy has the greatest impact when introduced early. The earlier students learn how to manage money, the more time they have to develop healthy habits and avoid costly mistakes. 

At HIM, financial education begins from day one, building a foundation that grows with them. Whether it’s the principles of accounting or understanding financial management, early exposure ensures that students are not just academically prepared, but also financially aware as they navigate internships, part-time jobs, and student loans.

For Latvian-born Jan, an HIM alumnus who entered the program with no background in business, this early exposure was transformative. “I was clueless about hospitality and business when I first came to HIM,” he admits. 

However, after completing my two internships, I was able to graduate confident that I had a solid understanding of how the industry works and what was expected of me…This was just the beginning of a career in finance for me.

Informed decision-making

Strong financial literacy enables individuals to evaluate choices critically—whether comparing loan options, selecting insurance plans, or deciding how to invest their earnings. 

It’s not about knowing every detail of the stock market, but about understanding how financial decisions align with personal goals and risk tolerance. HIM students equipped with this knowledge are better prepared to assess the trade-offs and avoid pitfalls that could set them back financially.

Strategies for Improving Financial Literacy

Improving financial literacy isn't about one-off lessons—it's about consistent exposure to real-world applications, guidance from experienced professionals, and access to networks that open doors. 

Formal Education

A structured academic program is one of the most effective ways to build strong financial literacy. At HIM, students benefit from a business-focused curriculum. Through courses like accounting principles, financial and managerial accounting, and an option to major in finance, students develop a solid foundation in understanding financial systems, making data-driven decisions, and evaluating risk versus reward.

This is further strengthened through strategic partnerships with industry leaders like Swissquote, a prominent digital banking and trading services provider. Through this partnership, HIM students have invaluable exposure and guidance in investing and financial market analysis. 

By integrating financial education into the academic journey—not just as a single course, but as a continuous theme —HIM empowers students to graduate with the knowledge and confidence to navigate personal and professional financial decisions. 

Professional advice

Financial literacy also grows through mentorship and real-world advice. At HIM, mentorship is woven into the student experience. Faculty mentors actively support students in building both technical know-how and personal responsibility.

Take it from HIM student Hala, who secured an internship with Richemont, one of the world's leading luxury groups:

Moving to Switzerland to attend HIM was the first time I had to completely depend on myself, and HIM helped me find my way. The mentors guide us, but they also teach us that we are responsible for the decisions we make. If it weren't for that, I wouldn't have had the confidence to approach the Richemont CEO or pursue this internship. 

Networking

Financial literacy doesn't develop in isolation—it's also influenced by the people, industries, and ideas students are exposed to. That's why networking is a key pillar of the HIM experience.

Each year, HIM students participate in the International Recruitment Forum (IRF), an exclusive career event that brings together global employers, alumni, and students. With access to over 100 international companies, HIM students have the chance to explore roles in finance, luxury, operations, and beyond—while also practicing the financial skills they've acquired in interviews, CV reviews, and employer Q&As.

This exposure doesn't just build confidence—it also teaches students how to evaluate job offers, understand salary packages, and make smart financial choices early in their careers.

The Empowering Role of Financial Literacy in Economic Outcomes

Financial literacy is more than a business skill—it’s a form of independence. It gives individuals the confidence to pursue opportunities, weather challenges, and contribute meaningfully to their communities and industries.

At HIM Business School, we believe financial education is non-negotiable for future leaders. That’s why our Business Administration program integrates key financial principles into real-world business learning, ensuring our students graduate with the knowledge and confidence to make smart financial decisions in any context.

Because when students are financially empowered, they don’t just lead better businesses- they lead better lives.

Frequently Asked Questions

What’s the difference between financial literacy and financial education?

Financial Literacy is the basic understanding of financial concepts like budgeting, saving, credit, and investing, while financial education is structured learning that teaches how to apply financial knowledge to make informed decisions.

Is financial literacy part of MBA entrance exam prep?

Not directly. MBA entrance exams (like CAT, GMAT) focus on quantitative aptitude, verbal ability, and logical reasoning, not personal finance concepts.