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. In the last edition of The Weekender, we discussed the basics of budgeting and interest rates.
Here are some more key concepts to start building up your knowledge of Financial Education.
Prioritising saving
Obviously, saving is an important aspect of maintaining a healthy financial situation. But the majority of people don’t prioritise this aspect as much as they should. It’s easy to ignore things like retirement since it seems so far off in the future. Learning to save early on can help you gain the knowledge, practice and skillset you’ll utilise throughout your entire life.
Beginners can start working on this concept in the simplest sense, like saving money for a higher-ticket item they desire. Working toward a goal is key here, and people need to understand that there’s a lot of value in paying yourself first – because the bills will always be there. Having peace of mind? Well, that comes with practice, diligence and patience – all qualities you’ll develop when mastering your savings skillset.
Credit-debt cycle traps
Meaning: It’s much easier to lose credit than to gain it and many people don’t realise how easy it is to ruin their credit – and how difficult it can be to regain credit – before it’s too late. That’s why it’s crucial to provide knowledge on debt earlier than later.
Credit can be an extremely useful tool – if it’s managed correctly. Making rash decisions when you’re young can end up costing you throughout adulthood, so it’s important to grasp the concepts and tools behind responsible credit practices as early on as possible. While the credit system is more prominent in American culture, it also holds true for locals, when dealing with things like credit card debt and loan eligibility.
Identity theft issues & safety
In this modern day and age, identity theft is more prevalent than ever. Since everything is digital and just about everyone has shopped online at one point or another, your financial information is more vulnerable to fraud. Understanding this concept, along with preventative measures, like password protection and limiting the amount of information shared online, can be the key to maintaining safe accounts or, inversely, can lead to financial ruin.
While it’s not a fool proof science (people can be safe and things do still happen), it’s important to safeguard your finances as best as possible to avoid the threats that exist.
With these key components to financial education, you can break each topic down into subsections and start to create a framework for your understanding and broaden your perspective on money and finances in general.
