(Mar. 12, 2018) — If the saying that money makes the world go round is true, have you ever wondered why knowledge regarding how to make and manage it isn’t always so pervasive? It is true that in this information age, knowledge regarding how to make, invest and manage your money is accessible, however, it isn’t always visible unless you’re actually looking for it. There are endless benefits of being financially literate with one of the primary ones being the opportunity it creates for you to improve your quality of life. For this reason, educational bodies, parents, and higher learning institutions should perhaps consider finding ways to encourage financial literacy, and this article will list a few reasons why.
Help Fight Poverty
Poverty is an ongoing issue that is affecting people globally. Research has found that in 2016, an estimated 43.1 million Americans were found to be living in poverty. This is a relatively high number considering that the population of the United States was around 323.1 million as of 2016. There are many causes of poverty, however, some of the leading causes seem to be low household incomes, wealth inequality, high unemployment rates, and declining wages and salaries. All of these reasons for poverty seem to be financially related which suggests that perhaps people need more information regarding how to manage their money or increase their incomes. Poverty has been an issue for decades and even in years to come there will likely still be levels of poverty prevalent in society. However, by encouraging financial literacy, you could give them a better shot at improving their financial circumstances and reducing some of the pressure placed on governments to eradicate poverty.
Help People Maintain Good Credit
Maintaining a good credit score is something that can be taught if financial literacy is encouraged. The U.S. Bank’s 2017 student financial literacy study, found that a number of students seem to misunderstand credit and the things that affect their credit score which is concerning. Credit serves multiple purposes such as enabling people to mortgage houses, pay for cars over time, as well as borrow money for personal reasons or to start businesses. If it happens that due to late and missed payments a person’s credit score has dramatically dropped, however, it can be nearly impossible to take out any credit after that. This means that in the cases of emergencies borrowing money from lenders would be difficult which could have several negative domino effects on their personal life and finances. However, if people are taught how to maintain good credit, they could use it to their advantage.
On the other hand, if you look at this offer from Bonsai Finance, you will notice that they give personal loans to people with bad credit. If someone has the right knowledge regarding how to use credit to improve their situation, they could use such loans to rebuild their credit score and learn to borrow more responsibly. When people have the right knowledge that enables them to put themselves in a position where they have good credit, they are more likely to be able to create more opportunities for themselves and improve their situation.
To Create Security
There are many things in life that create security, and money happens to be one of them. When people have financial security, it’s likely that they will have greater rest of mind and experience far less stress. It has even been suggested that financial literacy has the potential to lead to happiness as well as security. This is because focusing on money and paying bills can create a great deal of worry and anxiety. Financial security is so significant because it can help to secure your future. Beyond this present moment, finances will also be needed in old age and pensions as well as social securities may not be enough to sustain your average person. For this reason, people should perhaps learn more about investing, as well as stocks and bonds from a young age.
Improve Quality of Life
Having the right knowledge and information regarding money is a way to improve the quality of people’s lives. Although money isn’t the answer to everything, it does help resolve many of your everyday problems. When individuals and families understand how money works and how to make it work for them, they’re more likely able to create financial stability for themselves. Even if they’re unable to do this, they at least will at least have enough knowledge to help them find a way to create financial security for themselves. Many people don’t live quality lives because they don’t know how to manage their finances or improve them. Financial literacy, however, can open them to a world of vast knowledge and opportunities.
When you have financial security, it’s likely that it will reflect in your wellbeing. This is because stable finances give you greater access to better quality food, healthcare, environments and opportunities. By teaching people about finances, they have the opportunity to have a greater level of financial security. Even if they never become millionaires, they can at least manage their money in ways that keep them out of debt, help them save for rainy days and enable them to do some of the things that make them happy without financially crippling them. Additionally, this can have positive effects on their health and reduce stress, depression, and other negative things that could lead to health issues long term.
Financial literacy is one of many ways to create freedom for your average American. Although teaching people doesn’t guarantee that they will listen or apply the taught financial principles in their lives, it can be considered a step in the right direction. This is because knowledge is one of the many things that have the ability to empower and inspire people to take control of their lives and make the most of it. There are so many ways to educate people about how to manage their finances and so many approaches that can be used to pass on such information. It should, however, be a joint effort to make financial literacy something that is encouraged throughout our society.