Is financial education important
Published 03/31/2022 | Last updated on April 03, 2022
Financial education is fundamental in every person's life since it allows us to know the advantages and risks of money to benefit our financial and economic health. However, unfortunately, it is still not considered a priority issue in the family and social context.
Financial education within the turbulent changes of the economy and sustainable development represents a great challenge and commitment to society since it must provide a clear, positive, and forceful response to the needs of all the inhabitants of the world.
Many of the decisions you make daily have a direct or indirect impact on your finances. Financial education can help you prevent risks that jeopardize your economic stability and your plans.
However, despite its importance, few know what it is all about. They told you about mathematics, science, and languages in school, but do you know what financial education is all about? This discipline teaches you how money works and how to manage your investments and expenses to generate value strategically.
Therefore, the best investment you can make if you want to achieve your goals is to learn about finances. All you need to do is invest your time and energy in this task. Below you will see how to take advantage of this learning to achieve everything you have always dreamed.
What is financial education?
Financial education, which is not studied in schools and whose general ignorance on the part of society is alarming, is the knowledge that a person has about how money works. In addition, it includes those mechanisms that can help manage their family or personal economy. This knowledge ensures a good quality of life in the short and long term and, incidentally, brings them closer to financial freedom.
Proper financial education is nowadays more important than ever, as today's financial services are becoming more complex, and the options outside traditional banking are becoming wider and wider. Therefore, having the basic knowledge is essential to make good decisions regarding your finances.
The main objective of financial education is to provide people with the necessary knowledge and generate a change in financial behavior in society.
Key concepts of financial education
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The objective of financial education is to achieve a greater and better understanding of the financial world and generate a change in the way society relates to the economy, developing new planning and saving habits.
The key knowledge for understanding the financial world lies in the following concepts:
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Budget: Concept involving the daily management of money, with planning.
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Savings: It is the ability to save money and use it for future investment.
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Basic needs: It is how the necessities of life are managed, such as housing, food, transportation, or health.
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Banking: Refers to managing bank accounts and related activities, such as interest rates or terms and conditions.
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Health care: This concept involves wellness care and refers to medical costs and insurance.
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Debt: Refers to the ability to deal with debt effectively.
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Credit: The ability to maintain a good credit profile.
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Retirement planning: This concept is used in the long term, but the importance lies in the security of having financial stability in the coming years.
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Emergency fund: A concept linked to "just in case". The emergency fund is an economic cushion that allows you to survive without surprises when there is a major unforeseen event.
Why is financial education given so much importance?
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Firstly, because of the existence of a diagnosis based on international studies, which reveals the insufficient degree of knowledge of the population on fundamental economic and financial issues. The lack of financial education is considered to be one of the factors that have aggravated the effects of the international financial crisis. However, it cannot be said to have been a monopoly of the ordinary citizen. To this must be added the growing expansion and complexity of the range of financial products on offer, which sometimes places the user in a position of vulnerability.
Financial education is not limited to the elderly but is also necessary for young people who are already or will soon be users of financial services. Acquiring financial literacy today has several advantages for their future life.
The importance of financial education has been documented through various studies that prove that the more financial education, the more savings, better investment decisions, more rational use of credit, lower levels of indebtedness, better pensions, and a higher standard of living.
From the economic point of view, financial education is also vital for governments because it can contribute significantly to generating economic stability in nations. For example, when there is a sense of responsibility and moderation among citizens, who know how to plan and manage their finances, inflationary processes resulting from surplus resources experience significant reductions in their impact.
How to get started in financial literacy?
To begin with, you can choose to participate in conferences or financial planning courses, in which you and your family can acquire basic knowledge of financial education to be able to make the best decisions on investments and savings.
With this basic knowledge understood, applied, and analyzed, it will be time to evaluate the results. This way, financial literacy will become a habit in any area of your life.
It is essential that you understand the relevance of financial education in every aspect of your life since it is the first step to achieve a healthy economy and your future personal and family economic well-being, that is, your financial freedom.
This is why we recommend that you continue to learn and understand the financial culture and education concepts and, when the time comes, ask for help from a financial educator. A financial educator can help you prepare a savings plan for the short, medium, and long term and give you the best tools.
At El Paisa Multiservices we want to help you with your finances in Hartford, CT. You can contact us if you have questions about our services.
By Ingenuity & Solutions
