Financial education is as important right now as academic qualifications have been for the longest time. However, schools still concentrate more on academics and forget about this practical bit (the financial side of life).
Most people think that financial education includes taking credit cards, applying for loans, exchanging currencies, buying and selling stocks, etc., but it is managing expenses and income. It is planning for the future from a financial point of view. The fundamental questions are as follows: What should you do with the money you earn? Should you invest? Save?
Essay writing guru from Advanced Writers Joan Young once gave a speech and recommended that educators start emphasizing on financial education in the same way they do most subjects in schools, such as mathematics. Realistically, students will eventually recognize that obtaining knowledge on how to manage finances is as useful, as lessons taught in class. The only difference being financial education has no assessment of sorts, but it influences your life greatly.
A lot of young people aged 18-35 don’t have any clue about the importance of financial education. You would think the topic of money is taught back at home, but surprisingly, even most parents have no wind of this. Therefore, this comes in handy to explore all the facts you need to know about financial education.
Financial literacy is the ability to understand how money works; which involves, investment, expenditure, and management. This know-how helps in making appropriate choices on your financial life and security. It is important to note that it’s never too late to gain financial education.
If you still wonder why there is so much emphasis lately on making well-thought-of financial decisions, here is why financial literacy i.e. financial education is so vital in today’s world.
- Helps in putting down a good budget
Budgeting helps you gain financial stability. Therefore, having the right information on budgeting will help you manage your expenditures and your savings effortlessly. Eventually, you will have a stable financial life without qualms. This also enables you to have economic stability. This is because the economy will grow if consumers make good investments.
- Improve future decisions
Students require knowledge of finances to improve their future financial decisions. Teaching students in school about finances gives them a better understanding of how the world revolves around money and how to spend money wisely. Understanding finance earlier in life assists students with their future investments and jobs.
Schools should take in financial education in their curriculum. In turn, teachers can equip their students with money management skills, which the latter can then apply successfully in the future.
- Help Change the bad preexisting Financial Behavior
Behavioral change is the primary focus of most if not all financial education programs. The competency signifies knowledge of financial matters which is characterized by done tests and the practical application of the gained knowledge to real-life situations of individuals.
An educators’ goal is to increase the learners’ monetary decision-making ability. Unlike examinations that give you a score and always settle for improving your score. Once financial literacy is gained, it enables you to shift your attitude and better align you with your long-term economic goals.
- Leads to an independent financial lifestyle
Most young people depend on their parents as their sole source of getting money. This should not be the case. Financial education will help you reduce dependency on other people. This is because you will expound on financial knowledge, which helps you to manage money better. This knowledge will also help you see the need of saving for your retirement by spending less and saving more. When you retire, you will have money to invest in other projects.
Financial literacy helps develop a better comprehension of how money functions from a financial point of view and how your money can become profitable for you.
An advisor will go through your income and expenses and help you decide if it is the right decision for you to go for a large purchase or tell you its impact on the rest of your financial life.
- Complicated Financial Options
In an era where the consumer has to pick between having an investment or savings plans tells you how difficult the decision is. Choosing among diverse product options with fluctuating interest rates and maturities are the decisions that require adequate financial education.
Deciding on how different financial instruments with a wide range of choices can impact your ability to manage future financial needs, for example buying a home, financing your child’s education, or retirement plan.
The financial world is rapidly changing with numerous technological advancements, which causes a lot of confusion to potential investors. Therefore, financial education helps you to deal with such confusion by navigating through life
- Benefit to Emerging Economies
For most developing economies, the financially literate do help the financial sector grow and contribute to the economic progress of a country/ region, while also leading to poverty reduction.
The financial competence of a population is equally crucial for all established economies to become self-reliant and sustainable. It makes sure that most consumers have enough savings to provide an acceptable income that suits the elderly after their retirement while avoiding massive debt levels that might cause bankruptcy.
Most foreclosures do happen due to financial illiteracy among a majority of a country’s population. Research done by many financial institutions found that people with low levels of financial knowledge end up buying goods on credit, have little to no wealth, and fail to pay their balances monthly, resulting in very bad accrued debts. The financially illiterate does not invest, and they do not understand their loans or mortgages terms.
Financial education is necessary for all individuals because it enhances a nation’s economy as a whole. Once one attains this financial education, we can focus on the future and incorporate it more thoroughly into learning institutions and places of work.
Children should receive a basic education on this as soon as they join school since they will become the parents, investors, and leaders of tomorrow. When people want to invest, they do not know where to start, while many people may not be sure of whom to consult since the world is full of con artists. Therefore, take seminars on financial education seriously, and you will learn a lot about finances.
Motivate family, friends, and relatives on what you now know, and we assure you that you will become better investors.
Promoting financial education will have a great impact on individuals as well as on their potential for their future. Investments require people with financial knowledge since fraudsters take advantage of the financially illiterate. The financial stability of every countryman leads to the financial security of the nation.