Financial literacy is all about being aware of one’s income and how to properly allocate it for your expenditures and investments. It is the awareness of how much money is coming in regularly and occasionally. It also has to do with where you put your money and how you make it grow.
This is a skill that needs to be taught and learned as early as possible in order for folks to build the right money management habits that will ensure financial security in the future.
The Importance of Financial Literacy for Everyone According to the Experts
It’s hard to talk about financial literacy and money matters in general if it’s just based on opinions so we asked a few reputable financial experts about their thoughts on the importance of financial literacy and these are what some of them had to say:
1. The more we understand the value of money, the better money managers we become.
People who made bad financial decisions early on in life will benefit from financial literacy because they can still turn things around for themselves. Virginia Credit Union’s Financial Education Director Cherry Dale says that once people truly understand how the financial system works, people can take the right steps to make their lives better.
2. It helps us avoid acquiring large debts.
Phil Schuman, MoneySmarts Program Director of Indiana University says that between him and his wife, they accumulated a debt of $110,000 that they were able to pay off in five years only. Considering that they don’t really earn a lot, being financially literate helped them organize their finances that allowed them to be debt-free.
3. It gives us the platform to pass on practical knowledge to the next generation.
Paul Goebel, director of University of North Texas’ Student Money Management Center says that the future success of students today is no longer just defined by academic brilliance. He says providing them with opportunities to learn and develop life skills like money management is crucial to securing their future.
4. It helps us prepare for the worst times.
Education Specialist, Travis Cook, of the Utah State Board of Education, says that an increase in financial literacy can lead to an increase in financial capability which will help people get from merely surviving to thriving. This will give them peace of mind that if something as extreme as this pandemic was to take place again, they’re in a much better place financially which lessens worry and anxiety.
5. It gives us knowledge and understanding about investments and other streams of income and empowers us to make well-informed decisions on the matter.
Director Latoya Goree of the Office of Financial Literacy at UMKC says that financial literacy allows individuals to maximize whatever income they have and whatever amount it is. Whether they choose to diversify their portfolios or get their companies to invest in group insurance, people can make better decisions with the knowledge and awareness they have when it comes to financial matters.
On top of all the things, these experts had to say, being financially literate also helps improve the country’s economy and the living conditions of those who are less fortunate.
More than just personal benefits, a person who is financially wise can contribute a lot to the community he or she is in, whether it’s having enough money to start a new business that will provide jobs or have enough excess to give to the poor.
Financial literacy is a very important aspect of life that should never be neglected nor taken for granted. Proper financial education is needed if you want to have a financially secure future for you and your family.