A lot of people, especially the naive one(teens), often fall victim to financial illiteracy by overspending, running out of cash, or delving into commercial ventures that they know absolutely nothing about. Now the sad part is, this could all be avoided if people were being educated either in college or university on the importance of financial literacy.
So today, we’d be looking at some of the advantages of financial literacy for people from all walks of life.
Wants and Needs
A higher percentage of Americans who partake in impulse shopping do so as a result of lacking financial literacy. Anyone who knows how money works, how to spend, the rules that back up the sustainability of cash will surely know that there is a difference between needs and wants. Most of the things we buy are stuff we want and not needs. And the only way once can know that is if they have had excellent financial knowledge on how to manage money.
Credit cards
The simplest way to spot a financial illiterate is when they go around with their credit cards. Anyone who has any form of financial education would know that going around with credit cards is lethal to the sustainability of their income. Going around with your credit card will cause you to buy things more, which in turn will drain your income, which now takes us to the next point.
Savings and Budgeting
If you’ve never had a financial education, you won’t understand the importance of saving and budgeting in the world of business growth. This is why most people tend to spend, spend, and spend without saving. They do the fixed income jobs, not until retirement, when they suddenly realized that they’d been left with nothing to take home. That’s why it’s not uncommon to hear riches to rags stories. The bottom line is, they either failed to budget, save or never had financial literacy.
Investment
The investment could make you, and it can also mar you, depending on the when, how, and why question. And how do you get the answers to whether you should invest in perhaps a new venture that just struck the online world or not? Financial education. If you take the time to at least have some online investment courses before venturing into investing in things that cross your path, be it stock or cryptocurrency, you’ll most likely have the foresight of what you’re about to face which will help you in making the right decisions.
Sustainability
Lastly, on the importance of having financial literacy is that it helps one in knowing how to sustain money. It is one thing to have money; it is another to keep it. And the best way you can learn how to maintain wealth is by knowing the golden rules surrounding money, theories like your income should always be more significant than your expenditure (expenses) and so on. And the only way you can achieve this is by having a sound financial education.
So next time you want to keep money, know when to save, how to invest and how to budget, basically the rules surrounding finances, make sure to get yourself a financial course or educate yourself.