Recently while carrying out research, I stumbled on an article that states that according to a study, two-thirds of young people believe that a lack of financial education was one of the major factors that led them to debt. The study further states that most adults believe that their lack of financial education as a child has caused problems in their later life.
The report was produced by Santander UK, a digital bank wholly owned by the Santander group of Spain, which sourced data from several academic research papers and surveys conducted over the last few years.
However, this report spurred me to write on the importance of financial education.
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The Importance Of Financial Education
The importance of financial planning is inevitable in our daily endeavors. Individuals, families, firms, and governments all need it to be able to make proper financial decisions.
No doubt, proper financial education gives one clarity in life and also provides direction & meaning to one’s financial decisions. When inculcating the habit of financial planning, it enables one to be in control of their income, expenses, and investments which allows them to manage their money properly.
However, it is important to note that financial education is not only for individuals, but governments and organizations also need to equip themselves with financial literacy which offers a lot of advantages and most especially, saves them from running into debt.
This article wouldn’t be complete without talking about the benefits of financial education, below are four benefits of financial education;
Four Benefits Of Financial Education
1.) Proper Management Of Income: When you have a proper financial education, it will help you manage your income better. Through proper financial planning, it becomes possible to manage income more effectively through a defined plan. By simply creating a budget, you do not have to panic about some spending, as it helps to regulate your spending. It also helps you prioritize your spending as well as identify wasteful expenditures to achieve your financial situation.
2.) Savings: With proper financial education, it helps you take note of your income and expenses which will no doubt help to save money. You make a budget, which makes it possible to assess whether you are within budget or overspending. It will help you understand your savings rate and how much you need to reach your goals. When you customize a plan to include your goals and at which moment you want it achieved, you can plan for finances accordingly, which helps you save better.
3.) Improved Standard Of Living: One beautiful thing about financial planning is that it not only helps you spend wisely and save efficiently, but it also improves your standard of living. The reason why financial education improves one standard of living is that when it is developed and executed properly, it helps to grow your money, thereby improving your standard of living. You also get to improve your money with the right investment tools. This income, however small, can be used to improve your living.
4.) Prepare For Emergencies: Life, no doubt is full of uncertainty, no one can predict or control what happens in the future. Some emergencies can affect you financially which can lead you into a serious financial crisis and debt. Therefore, one of the best ways to handle emergencies is to have an emergency fund set aside. This fund will provide you with enough money to cover your emergency expenses, without you falling into debt. One great thing that an emergency fund will do for you is that it will act as an insurance cover for you against unexpected expenses.
Financial education is a basic life skill that has a direct impact on personal well-being. Basics like money management, savings, investing, and debt will lay a strong foundation for money habits if imparted from a young age.
Research reveals that vital money habits and skills start between the ages of 3 and 7, which is advisable for parents to teach their kids early. Since lack of financial education is what has led two-thirds of young people into debt, it is ideal that the curriculum in schools makes provisions for financial education, to equip these young ones to be able to make reasonable financial decisions when they become adults.
This is a worthy blog post.
It is even more valuable now the economy is down.
The findings of that research is really true. So many people are not taught about finance early enough because many earning parents just want to see their kids happy.
Also, the mentality that we should give our children all what we wished we had during childhood is a not helpful in finance terms.
The entitlement to these good life without stress has led many to be financially reckless + ignorant too.
Again, worthy article.
Thank you for sharing.
Good one Emmanuel.