The Importance of Financial Education - Part 1 of 2

The Importance of Financial Education - Part 1 of 2

Not everyone wants to be filthy rich, but imagine how differently you could live if you didn’t have to constantly stress yourself about money. Most people don’t think about money, because the education system doesn’t teach proper financial literacy. Without financial education, you can expect to have no money for retirement.

Even people, who have money saved up, can be losing if they don’t understand how to save. A majority of people on the island can qualify for a loan, but do not understand the interest payments and/or the consequences of being in default.

Financial education is the key to growing an economy. It is the ability to understand how money works. It is the art of investing and managing money and the ability to make sound financial decisions.

If you look at how the education system is set up, many people never learn how to properly use and save their money. The minority of people who are exposed to understanding financial education are mainly self-taught. Here are some key elements you can use to start building up your knowledge of Financial Education.

The basics of budgeting

Creating and maintaining a budget is one of the most basic aspects of staying on top of your finances. In this modern day, it’s easier than ever to create a budget with the help of websites, apps, online courses and even local businesses.

It doesn’t matter if math isn’t your strong suit – thanks to user-friendly tools, everyone can get help with keeping their finances on track. And when utilised properly, they'll keep you in the know about where your money is actually going.

Without following a budget, it’s difficult to hold yourself accountable on where your money is coming from and what it’s going toward, so mastering the basics of budgeting is where any financial novice should begin.

Understanding interest rates

While you may touch upon the concepts within a mathematics course, it’s important to understand different aspects, like compound interest. Why? Not only can it help you save even more, but it can make the difference between borrowing a small amount and paying back much more than you need to for years to come.

Understanding the ins and outs of interest can impact your finances more than you likely realise, so it’s an important concept to gain a better understanding of early on in life.

In our next edition of The Weekender, we will discuss three additional topics: Prioritising saving, Credit-debt cycle traps, and Identity theft issues & safety.

The Daily Herald

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