Financial literacy can become very valuable later in life when planning ways to acquire financial freedom. In order to plan long-term financial goals there are certain skills and knowledge required. In this guide below we are going to list the top arguments why financial literacy should be taught right from schools and how it can have a tremendous impact in the later stages of life.
Top reasons why financial literacy Matters and must be taught in Schools
Financial literacy can not only help individuals to understand the nature of financial markets but to make better financial decisions in life too. Financial markets behave in ways that are very difficult to predict and financial knowledge can help investors limit losses. With there being many different markets like bonds, futures, Forex, stocks, and many more it is essential to understand the markets investors want to invest their capital. Financial literacy will also help to manage passive incomes generated from wise investments it helped to create. Let’s list the top reasons why financial literacy should be taught from an early age in life.
Real-life applications
Financial literacy helps shape real life on a financial freeway where average people can have more free time and plan their finances properly. Without knowing the basics of personal finance and how to manage and plan them it is impossible to win the rat race. Rat race refers to Robert Kiyosaki’s idea that it is important to build passive income streams and not be solely reliant on daily jobs. It is critical to have savings and invest them in good passive income sources and financial literacy is key in defining what are liabilities and what are real assets with potential for passive income generation.
Empowers to take control of your finances
Having the knowledge of basic financial terms and topics will help individuals to take control of their financial future. Financial skills including budgeting, saving, investing, and debt management are essential to achieve financial independence and stability in the long term. In today’s turbulent times with financial risks, crises, and wars, financial literacy and the ability to plan and execute personal budgets can help many people shape their futures.
Protects consumers from financial fraud and scams
Understanding the key topics of the financial world can greatly reduce the chances of getting caught in financial fraud as an average person can quickly detect red flags and protect their finances. Financial literacy promotes taking informed decisions and financially literate individuals are much less likely to fall victim to various fraudulent schemes. It can also prevent taking risky debts with high-interest rates or making bad investing decisions.
Helps in better understanding financial risks and how to manage them
Risk management is key when it comes to investing your savings for a better financial future. Risk management can help you limit losses during investing and trading and it is a critical part of finances.
Reduces poverty and inequality
By knowing how all it works it becomes possible to solve poverty challenges as more literate people can make better decisions and reduce their chances of getting poor. This way developing countries can reduce poverty and build advanced economies with educated individuals. The more knowledge a country has, the easier it is for the population to make better decisions when planning their finances for the future. The European Commission believes that financial literacy is at the heart of people’s financial well-being. Knowing how you are going to manage your finances can help you to better plan exact steps to achieve financial goals.
Long-term financial planning increases chances of success and prosperity
Financial literacy in schools will help students to think about their financial future as early as possible and to target a better financial future for themselves. By knowing where to invest, how to manage personal finances, and use the budget for financial goals students can plan ahead and get encouraged to plan in the long term. The only way to achieve financial success is to plan for the long term.
Entrepreneurship and an increased number of high-level jobs
Knowing your long-term financial goals motivates you to develop an entrepreneurial mind and always think about opportunities around you. In business, the mindset is one of defining factors for achieving success and financial literacy can greatly foster a needed mindset. The knowledge of basic financial ins and outs will help you make better decisions in business and avoid common mistakes that can lead to losing money.
Reduced financial stress
Financial problems can lead to mental health issues and damage well-being. Being able to properly manage finances and plan before taking decisions can have a beneficial effect on stress levels and reduce emotional burden. By providing financial literacy education, schools will help their students develop skills to manage their finances effectively and reduce stress, and promote overall mental and emotional well-being.
