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Shockingly, today a good number of people do not comprehend basic financial principles, which is worse in the case of women. However, before you can understand why learning about finances is essential, you first have to know what financial education refers to. Financial literacy is described as the ability to understand how money works, such as investing and managing money through sound financial decisions. When it comes to financial topics such as budgeting, credit scores, interest rates, etc. most people are clueless.
The main reason why so many people lack at least basic financial education is that it is not taught in most institutions of learning worldwide. However, no one is to blame for the lack of financial education worldwide. This should be a personal initiative by either parents, learning institutions, or the government to ensure they can provide sound financial literacy for the next generation. Besides, this is a sure way for future adults to steer clear of avoidable debts through sound budgeting techniques.
Financial illiteracy is a serious problem worldwide. However, some regions are more affected than others. As expected, regions such as South America and Africa, where the basic literacy levels are still low, have significantly lower financial literacy rates. However, not to say that everyone in the first world countries is financially literate. Studies have confirmed that nearly half of US citizens lack sound financial education.
This is a problem that requires our immediate attention. As an essay writer, financial education needs information about finances to be readily available for both adults and students to provide them with adequate tools for financial freedom. As a result, you will make more informed financial decisions. Below are some of the principles of financial education:
Always save
Nurturing a saving culture ensures that you have a fallback plan in case your primary source of income is affected. You can use any number of available options, such as bank savings plans, fixed deposits, etc.
Invest wisely
Financial education is the key to making sound investments, which you can cash in over a long time, such as buying company shares, opening a business, and many others.
Credit and debt management
It is very easy to overspend on your credit card, especially when you have the option to pay over an extended period. However, this practice will lead to more and more debt piling up. Nonetheless, with sound financial education, you will have the tools to avoid liability and also learn how to use credit facilities wisely.
Live within your budget
It is not easy to restrain yourself from spending all your money at once. However, with a budget, you can plan what is needed and ensure you are making sound financial decisions. Besides, after setting your budget, ensure you stick to it.
Financial security
Financial education also offers students the idea to secure both personal and financial information. For instance, you should never share your ATM pin, online banking passwords, as well as any other personal information with just anyone.
The number of people lacking proper financial education worldwide could be lessened if learning institutions introduce financial education courses to provide at least basic advice for students as they progress with their training. This is a practice that will ensure they are better prepared when faced with significant financial decisions, such as choosing between buying your first car or a home.
This is evident as individuals with higher financial education are better prepared for the uncertainties of tomorrow. For instance, with the current coronavirus outbreak worldwide, most people have found themselves lacking a stable source of income for self-sustenance. Though it is not their fault, this would most likely not be the case for financially literate individuals who had the foresight to save some of their money.
It is my opinion that since this is a common problem across the board, it should be supported by various stakeholders to ensure we raise global financial literacy levels. Significant strides have been made to curb the increased complexity of financial decisions by consumers worldwide. Besides, there are government-run programs that aim to cultivate a saving culture for low-income earners as well as helping them understand credit facilities.
It is clear that students who gain financial education early on in school are better prepared to make sound financial decisions later on in life. As such, most governments worldwide should prioritize financial literacy in their respective learning institutions.
