We take Financial literacy in children and teenagers for granted. “Why is financial literacy important?” is something you would never hear from a kid.
That’s because most of the time, it does not receive the attention it deserves. The irony is that money will impact nearly every area of our life.
How can you expect your adolescent to manage their own money when they become adults if you don’t teach them about money?
From infancy through maturity, financial education should be a continual process. Unfortunately, it appears that not even our educational institutions are aware of this truth.
We tend to believe that individuals will learn about money on their own. When it comes to financial literacy, we must have a paradigm shift.
So what’s the significance of financial literacy for everybody?
The significance of financial literacy for our young, on the other hand, cannot be overstated. Nothing is more hazardous than a financially ignorant adolescent. Someone who has no clue how to handle their finances might quickly fall into various financial traps without even realizing it.
It’s tough to undo terrible financial mistakes in general, and it might take years to do it. Teaching young people about money at a young age will provide them with essential information and skills that will enable them to make educated financial decisions.
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Let’s take a look at some of the reasons why financial literacy is critical for our youth:
1. Financially illiterate kids turn into unprepared adults.
According to statistics, young individuals who never acquired a primary financial education grow up to be irresponsible adults, particularly in financial concerns. They have no idea how to invest, cannot save enough money to purchase a home, and frequently have lousy credit ratings.
These actions are in stark contrast to those of people who were educated about money management as children. Because they have an excellent financial foundation as a child, such people are able to make educated financial decisions as adults.
2. Financial literacy empowers children.
You’ve probably heard the phrase “information is power.” It’s the same for money. The more financial knowledge you have, the more prepared you will be.
On the other hand, any young person who lacks adequate financial understanding and information is at risk.
Why do we attend school to study science, math, history, and other subjects? The solution is to give us more authority in those areas. Similarly, parents should prioritize money education alongside other disciplines. We must empower young people in their understanding of money and how it works.
3. Financially literate people can handle emergencies better.
We are occasionally confronted with urgent problems that need vast sums of money. As opposed to someone who is financially illiterate, it is simpler for a young person who is financially educated to maneuver and emerge from a safer standpoint.
There are a variety of reasons why financial literacy is critical for our children. We need to teach them how to save, invest, budget, and handle debts correctly. Failure to do so may result in a generation that is both reckless and impoverished.
4. Earlier financial education is the key to avoiding bad financial habits.
More and more young people engage in lousy money habits like frequent gambling or not creating budgets.
Others might easily persuade them to engage in additional bad financial practices. A person with a solid financial foundation will not be easily enticed to engage in activities like gambling or Ponzi schemes.
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5. Financial literacy leads to better planning.
Financial planning is a step in the direction of your goals. You may have fantasized about taking a vacation abroad, owning a home, or living a dream with your family. Don’t let your dreams be stifled by obligations! Financial planning helps you achieve your goals while also taking care of your responsibilities.
If you want to retire in more than ten years, you should start investing now since the magic of compounding only works if you stay invested for a long time.
When expenditures continue to rise, but income appears to be dwindling, financial planning might assist you in building an appropriate retirement fund. It’s a good idea to think about investing for your long-term objectives.
That being said, it’s always better to make kids familiar with this concept earlier in life.
The Advantages of Being Financially Literate
There are several advantages to being financially savvy. First, it helps us in comprehending the actual worth of money. We are better equipped to manage our finances when we grasp the value of money. We will be able to recognize the importance of planning, saving, and avoiding wasteful spending.
Second, We can avoid becoming debt slaves if we are financially literate. You’re less likely to put yourself in dangerous financial situations if you have the wherewithal not to do so. That is, you will only borrow what you can afford to repay.
Third, It teaches us how to invest and make money. Being financially savvy enlightens us on a variety of methods to invest our money and grow our wealth.
Fourth, It keeps us from making bad financial choices. A well-informed individual will not be readily swayed by Ponzi schemes or gambling. This is due to their understanding of the worth of money and the difficulty in obtaining it.
To summarize, financial literacy among young people will be critical in 2021. A person’s youth is a crucial period in their life.
The financial mistakes you make in your youth will have a significant influence on your adult life.
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A lack of financial literacy affects folks all over the world. Consumers in developed economies also show a lack of understanding of economic concepts that may help them better comprehend and negotiate the financial environment, manage financial risks, and avoid financial traps.
We don’t want to arm our children with not only primary education. It would be prudent of us to arm them with the proper financial knowledge to navigate their futures with more ease.