According to experts, financial education and literacy should be everybody’s business. When the level of financial education is high, people make more sound and balanced decisions and enjoy a more stable and prosperous life.
Financial education is also an integral part of a person’s personal and professional development. Without qualified financial education, it is difficult, if at all possible, to navigate the complex world of financial decisions, market changes, and a host of other factors influencing people’s well-being. Let’s take a closer look at why and how financial education matters in today’s society and why you should ensure a high level of education yourself.
Sound decision-making
First things first. Better financial education means better decisions, and better decisions mean a better quality of life and well-being. When you have a solid financial education background, you can make informed decisions about where to invest and whom to avoid. You will also learn how to discern genuine and lucrative opportunities from scams. This makes you less susceptible to fraud and failure.
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Long-term planning
Financial education helps people develop more evidence-based and sustainable long-term plans. Financial education is of utmost importance when making savings and saving enough to guarantee a stable and carefree retirement. This means you should not accumulate too many liabilities and debts, making it impossible to make savings. Too much debt and loans are also associated with a lot of depression and mental stress. When you have the right knowledge and skills, you know how to avoid taking on onerous and unjustified commitments with little or no return on investment. Those who are financially literate commit funds to stable and reliable pension funds to ensure that they can live off annuities later on when they retire.
Better risk management
Risk management is part and parcel of any financial planning and decision. No matter how lucrative a business proposal looks, you should have the skills and knowledge to assess related risks. There is no such thing as a risk-free investment or undertaking. But it is just one piece of the puzzle.
Once you are done with your risk assessment, you should be able to develop a risk management or mitigation plan. This entails sorting the identified risks by priority and significance. Focus on the ones that seem most detrimental. Consider taking bachelor’s finance programs to learn more about prudent risk management and mitigation. It helps you identify the resources you need to manage them effectively and develop a realistic and time-bound plan for risk management with clear targets and indicators.
Less poverty, more inclusion, and more equity
Financial education efforts are also aimed at reducing the levels and incidence of poverty. The more educated people are in financial terms, the more likely they will break the vicious cycle of poverty. Better financial literacy also means a broader inclusion of those traditionally excluded from income-generating and livelihood opportunities. At the end of the day, this paves the way for a more equitable society that we should all strive to establish.
Making smart investment decisions
If you have sufficient resources to invest, financial education will help you identify and make the most of any emerging investment opportunities. More often than not, the timing of your decision matters most. When you are skilled enough, you can quickly identify potentially profitable undertakings and proposals. This leaves your rivals with less time to beat you.
Final Thoughts
Financial education plays a vital role in modern society. It has become part and parcel of one’s personal and professional life and development. The more people are financially educated, the more likely society will be prosperous. That’s why it makes sense to invest a lot of time and energy in financial education and the development of financial skills.
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Barbara Fielder is a popular author, experienced educator, and researcher. Over the years, she has been exploring the role and importance of financial education in modern society. Barbara’s posts and articles are particularly popular among students who are starting to learn the ropes in financial education.
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