Today in practical wisdom, we’re going to be learning why a financial
education is the best investment you can make. A financial education is a long-term approach
to building wealth. It builds success on many levels by growing your knowledge, experience, and
portfolio, so you can retire early (if you want) and wealthy, with security and peace of mind.
The goal of financial literacy is to help you better understand the basic principles,
in order to manage your money better. The fact of the mater is, there is so much information
out there to help educate yourself on your financial standing and a lot of topics like debt,
saving, investing, and budgeting. And by learning more about these areas, over time,
you’ll be able to achieve financial stability. You see, handling your finances the right way
should be a priority and it should drive your daily spending and savings decisions.
Experts on personal finance advice taking time to learn the basics
from how to manage a checking or debit account, to how to pay your bills on time and so on.
Financial literacy stands to be one of the best lifetime investments you can ever make,
and that’s why where are going to be sharing with you a lot of reasons why.
1. It helps you strategic plan your finances Planning is where any successful financial
investment begins. And by acquiring financial education, you have the knowledge and skills
on how to save successfully, the type of investments to make and the kind of
assets you’d like to acquire. With financial literacy, you’ll also know the due diligence
steps to take before investing your capital on a new project, which might be risky.
It also prepares you for your future by having a plan for retirement early.
You see, being financially literate can have a positive impact on your life.
Those who learn and plan their finances properly can experience less worrying,
better rest and gain confidence knowing that they are prepared for the future.
2. It gives you financial security Financial security refers to the peace of mind
we feel when we aren’t worried about money. Often this means having enough income to comfortably
cover expenses, be it debt, utilities, or anything else, and having savings to cover emergencies.
It also means you’re in control of your money and you’re not worried
should an emergency come about. You see, the beauty about being financially literate is that,
it allows you rest easy knowing fully well that your finances are well invested, and are in order.
It’s one thing to make an investment and another to sustain it.
If you have a solid background in financial literacy you can put your
finances in order quite seamlessly. If you plan everything from the start correctly,
then maintaining financial security is easier regardless of the investment portfolio you choose.
And that will guarantee a secured future for both you and your dependants for years to come.
3. It helps you set realistic goals
A lot of people live way beyond what they can afford which messes their finances big time.
With so many expenses, loans to pay back, and a certain lifestyle to maintain
you go through your income so fast you don’t even get a chance to save anything.
As you gain financial knowledge, you’ll be more inclined to set goals for yourself.
You may find yourself excited and more determined to work towards achieving these goals,
and setting financial goals decreases the stress and anxiety you’ll experience
when you face your financial reality head on.
If you’re financially literate, you have the skills to come up with a detailed budget that
will accommodate all your financial needs. Whatever you’d like to do with your money
be it buying a new car, start a business or going on vacation with the family,
it all works out perfectly without having to put a strain - on your finances.
4. Improved quality of life Enjoying a quality life means being able to take
care of your most basic of needs, as well as a few luxuries while still having something left over to
save for the future and any emergencies. Having a financial education allows you to live debt free
and stay clear of gambling and investment traps, that will inherently drain your accounts. With
a financial education, you’ll able to live comfortably because your spending, savings
and investment strategy is well planned out. The role that financial literacy
plays in the quality of people’s lives, is one of the key factors in achieving the success of
every individual, and the society as a whole. A good life is limited by your
ability to access the required material and financial resources. Without an adequate level
of financial knowledge, the harsh truth is, it’s very difficult build sustainable wealth.
5. It helps you avoid scams and financial fraud
Financial literacy can really save you from landing into all sorts of trouble in the finance
world. It becomes easier to catch red flags when it comes to investing, banking, or any
other money-making schemes. It also ensures that you take time when making any financial decisions.
You see, you not knowing how to manage your money can lead to disastrous results
like falling victim to fraud and scams. One study in particular found that those who
feel financially insecure, are more likely to lose money to fraudster.
And did you know, a lack of financial literacy is among the biggest indicators of being scammed.
Educating people about phishing scams can drastically reduce someone’s vulnerability.
The best way to avoid falling victim to a scam
is to take proactive steps to protect and educate yourself.
6. A secure retirement As you get older, having
a basic understanding of your finances, and how financial products work, has a profound impact on
your overall financial position and your ability to provide for your future financial needs.
Remaining on top of finances plays a key role in whether or not you feel comfortable and enjoy
your retirement. A study found retirees with good levels of long-term financial literacy,
experienced positive retirement outcomes. Their solid financial literacy skills provided
them with a strong sense of control over their financial well-being. Financial literacy is also
associated with your financial situation, which is an important predictor of your well-being.
7. It gives you control With a financial education,
you have the power of your personal finances instead of letting money control you. This
empowers you and makes you feel more confident and decisive with your money.
Your attitude towards finances changes, and the way you think about money changes.
When you have a financial education you begin to really understand how debt works, interest rates,
and how to avoid debt disasters, and you learn to differentiate between luxuries and necessities.
Managing your money demands constant attention to your spending and to your
accounts and not living beyond your financial means. One of the fundamentals of a successful
personal finance plan, is being able to budget. Budgeting requires that you analyse and change
some of your spending habits. Instead of your money controlling you, you control your money.
It’s crucial to develop habits to save, avoid financial crisis and have peace of mind.
You see folks, achieving financial literacy can help us avoid making poor financial decisions,
helping us become self-sufficient and achieve financial stability.
If all this sounds good to you, the key steps to attaining financial literacy include, learning
how to create a budget, tracking your spending, paying off debt and planning for retirement.
Educating yourself on these areas involve learning how money works, setting and achieving financial
goals, becoming aware of unethical financial practices, and managing financial challenges
that life may throw your way. And while it can take some time,
there are some simple steps you can take to improve your financial literacy.
1. Hit the books The first step towards financial
literacy is to start reading everything about money matters including investing,
money management and finances. At the most basic level, you can learn how to pay yourself first,
how to manage and pay off debt. You could start with newspapers and magazines or books
that teach about finances. Books will become key in your quest to becoming financially literate.
Dedicate a few hours a week to reading books about money management, investing, finances and you’ll
notice the difference in no time. 2. Financial literacy course
Taking a course on finances is easier now than ever before.
There are so many ways you can learn depending on your needs or situations. You might decide to
take a college course, enrol in online classes, or learn at an adult education centre and so on.
This is especially for those who’d like to go further in their quest for financial literacy or
just need structure in order to learn. You have to pay for most of these courses but there are those
that are free online and come with great teachers. 3. Use financial management tools
Managing your finances doesn’t have to be hard or boring.
There is an abundance of tools to help you be more proficient thanks to technology and the internet.
Besides helping you organise and visualise your financials, you end up learning a whole lot too.
There are many services available online and you can easily connect them to your
checking and savings accounts, credit cards and mortgage to monitor your spending. You can use
these tools to create a budget and monitor how effectively you’re staying within the budget.
4. Listen to podcasts Finding time to read books might be a challenge
especially if you have a busy work and family life. And that’s where podcasts come in handy.
There are so many you can listen to on your way to or from work. While doing house chores, running
errands or walking the dog. It’s very convenient and a great way to soak up financial news.
5. Ask for advice A financial professional can
answer your financial questions whether it’s about the basic day to day money situations,
or more complex long term scenarios. They can also assess your current situation,
help you make a plan for all your financial needs and help you stay on track going forward.
So hopefully now you know that a financial education is one of the greatest bargains in life.
It costs little, risks nothing, and the returns are huge. It’s the best investment you can make.
And the sooner you get one the more it’ll be worth to you.
Knowledge is power, and it will help you make wise and confident decisions for your finances.
Investing in your financial education is the single best investment you can
make towards a better future. With that said, thank you all
so much for watching. Have a great day, and I’ll see you all in the next one.