Financial education is very important because it helps you become literate on the subject of money. You might be asking, “Why is financial literacy so important to learn?” “How important can it be for my life?” Worry not, because I’m here to tell you just that. By the end of this post, I hope that I’ll be able to convince you to learn the subject. Regardless of what profession you’ve taken, I believe that you are capable of learning it.
A Brief Definition of Terms
Before we begin, I would first like to define some terminologies so that we are on the same page during the entire article. Also, treat these terms as a free takeaway and it’s all yours to learn and apply. Sounds good? Okay, here it goes.
- Financial Education – is a subject that deals with the concept of money, which can be learned from different fields such as accounting, marketing, economics, etc. (anything that has to do with money)
- Financial Literacy – is the ability of a person to understand the language of money, that is, being able to read the numbers, speak financial jargon, and calculate different metrics such as ROI and cash flow
- Money/Cash – is a tool that is used for the exchange of goods and services between two parties
- Income – is money that goes into your pocket such as a paycheck, interest, businesses or investments
- Expense – is money that goes out of your pocket such as bills, taxes, rent, or living expenses such as food and clothing
- Cash Flow – is the amount of cash that is going into your pocket after deducting all the expenses, which is basically Income minus Expenses
- Due Diligence – is the process of assessing a business or investment whether it’s safe to consider or not
Well, I could go on for a long list of terms, but that’s not what this article is about. You are here to discover the reasons why you should consider financial education in your everyday life. So I’ll end the list here and let’s proceed to the meat of the subject.
Why Study Financial Education?
Financial Education is a very broad subject, but I do not say this to intimidate you. The learning curve will be steep but that doesn’t mean you shouldn’t study it. Don’t be afraid of it because in the end, your financial literacy will help you in many different ways. Here’s how.
- Prevent Costly Mistakes
This is important, for it affects you as much as it affects me. I’ve been more times impacted by my financial mistakes than anything else. I had a job one time that has a big paycheck. Every time I have extra cash to spend, I would go aimlessly spending it on things that are not really important such as eating, watching movies, and buying things just for the pleasure of buying it. The worst part is, I tolerate this kind of habit and don’t do anything to discipline myself.
It was when I moved from a higher pay to a lower pay that I started to think twice. Suddenly, I realized how important money is and that it is not something that I should spend aimlessly. No, a high-paying job will not solve the problem. After all, having a much bigger income would entice you to take on larger expenses. That’s where financial education comes to the rescue.
By learning how to handle money, you can be more responsible with your finances and therefore develop self-discipline. You’ll develop the habit of due diligence in order to minimize your mistakes, especially when you’re about to buy an investment. It’s said that the number one solution to handling risk is by developing your financial literacy, and it’s a skill that rich people have developed over the years.
- Gain Protection from the Outside
People who invest their time in learning financial education are better thinkers than someone who has not taken the time to do so. They are more observant because they have the ability to understand different subjects such as accounting and marketing. They will diligently do their homework before they commit to buying something.
As a result, they are less likely to be taken advantage of because they use their experiences to look through a certain transaction. For example, I would like to learn how to make money from affiliate marketing, so I will do a Google search and find a lot of training programs that promise great riches. If you’re not educated enough, you would just go on and take the plunge, and that is risky. Remember, not all advice out there is good advice.
If you’re not careful, you might actually come across a scam and waste your hard-earned money on these crooks. However, if you are financially literate, you will understand things that a total newbie won’t. Unless you have a friend who’s always there to give you financial advice, you should strive to get a good financial education before you take the plunge. It will definitely save you a lot of time and money.
- Find Opportunities to Make More Money
Who wants to make more money? Of course, everyone does! So most people would go off finding another supplemental job in order to increase their income. However, that is not what I meant by making more money. You might be earning a lot, but you are giving up your most precious resource, your time. Also, you’ll risk yourself of getting sick which is very expensive.
When I was in my job, I always had this nagging thought: “Whether I do an excellent job or do an inferior job, I will still get the same amount of money for my effort” Does that make sense to you? Even if you get promoted, the pay raise is not that significant and is not really worth working for. The solution? Start a business or invest your money! Again, this is where financial education can help. The more you invest in studying this subject, the more creative ideas you can develop to make money.
In the book Rich Dad Poor Dad written by Robert Kiyosaki, Robert and his bestfriend Mike started a business when they were nine years old. By using their heads, they were able to spot a business opportunity by collecting a pile of comic books and setting up a comic book library in the basement of Mike’s house. They would collect 10 cents for the admission fee and the kids are free to read any comic book they want in the library. By the end of three months, Robert and Mike made lots of money as a result.
- Improve Your Quality of Life
Financial education is that one thing that will help you live a better, happy lifestyle. Such lifestyle allows you to build your dream house or have your dream sports car. Such lifestyle allows you to buy new gadgets and luxurious items. Such lifestyle will enable you to travel around the world and be able to visit the most wonderful places that the world has in store. Such lifestyle will also allow you to live a healthier and stress-free life because now you don’t have to worry about paying your bills and buying healthy foods for your family.
What I’m trying to point out is that, by investing your time and money now in learning the subject of money, you would be able to afford all these things in the future. Life is meant to be abundant and you deserve the riches of the world, no matter where you’re from. The only thing you need to do is to get started now!
- Achieve Financial Freedom
A lot of people dream of achieving financial freedom, but only a few get up from their couch and start taking action. Like I said earlier, financial education is a very broad subject and is hard to learn especially as a beginner. I think this is the reason why only a few people reach their dreams and live the life that they want. The majority will simply return to their old jobs and be contented of what they have.
Financial education is very important because it will ultimately help you reach financial freedom. I believe freedom is very important in this world we’re living. It means that we can choose to work on our jobs or not, and still be able to live freely. It means that we have the time to attend to our loved ones. It means that we can hang out more with our friends, and still be able to make money while doing that. All of that will happen once you start training yourself to become financially literate.
The Most Important Thing is to Get Started
If you’re ready to learn financial education, then congratulations, you’re on your way to success. Remember that the road to financial freedom will be full of challenges and obstacles. However, with the right amount of perseverance and hard work, you will definitely reach your dreams. Here are ways you can get started.
- Know your Why – The first thing you need to do is to know your reasons why you want to get rich because it serves as your motivation to move further. There is an abundance of how-to advice out there, but only you can find out why you want to do it.
- Make the Right Choices – Perhaps the number one reason why you are struggling with your finances is making the wrong choices when it comes to money. You need to learn how to make the right decisions especially when you’re running a business or buying investments.
- Be Dedicated to Continuous Learning – Financial education is a very broad subject, that’s why I recommend that you become a lifelong learner of the subject. Not only do you improve your financial literacy, but it’s also fun. The most successful people dedicate themselves to reading, watching videos, and attending seminars all throughout their lives, and so should you.
- Focus on these Subjects – If you’re looking for subjects to learn financial education, then I suggest taking materials that are related to: accounting, sales, marketing (offline or online), economics, law, personal finance and investing. If I missed anything, just leave me a comment below so that I can include it here.
That’s all folks! I hope you’ve learned a lot from this article. If you have any questions and comments, please leave them below. Thank you and have fun!