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Many people get through life without a financial education. Managing our eventual income is not something we tend to learn about in school. But being financially aware is a life skill all of us should possess. Here are eight reasons why financial education is your best bet:
You Learn How to Budget
One of the basics of financial literacy is knowing how to budget. Assessing income against outgoings, understanding how much disposable income you have and where you can save money if needs be, is the foundation of all other financial decisions.
You Learn How to Grow your Money
When you have a solid understanding of your personal finances and the financial climate, you’re better placed to grow the money you already have. You could learn to trade and grow your money on the stock and foreign exchange markets. You could invest in property. Or you could buy bonds. Whichever investment option you choose, you’ll feel more confident about taking risks and working out where opportunities lie.
You Learn How to Save your Money
Saving your money is about so much more than putting it in a savings account. Banks offer different savings deals with good interest rates to attract new customers. When you understand a few financial basics you can shop around with confidence, finding the best savings accounts and moving your money when you need to.
You can Plan for Retirement Effectively
Many people bury their heads in the sand when it comes to their financial future. They think only in terms of the present, not what is going to happen decades down the line. But it’s important to think about retirement early on in your career. By learning about different pension plan options, you can make sure you have enough money to live comfortably later in life.
You Can Build an Emergency Fund
Living hand to mouth without the savings you’d need in case of an emergency can be worrying. When you’re financially aware you can look at your monthly budget and find places where savings can be made. That money can then be put away for a rainy day.
You’ll Avoid or Get Out of Debt
Being fully versed in interest rates, repayment plans and loan terms will help you make better decisions when it comes to your debts. You’ll be able to avoid lenders who charge exorbitant rates and find ways to pay off the debts you have in a manageable way.
Financial Advisors Don’t Always Have Your Best Interests at Heart
You may think there’s no need to gain a financial education. After all, there are experts out there who can do the job of managing your money for you. The sad truth is that financial advisors don’t always have your best interests at heart. They may get commission for pushing certain financial products or make their money as a percentage of how much you invest. It’s much better to manage your money yourself then you can be 100% confident of how and where it is being invested.
You’ll Feel Less Anxious About Your Finances
When we don’t understand something, it causes us anxiety. We know we should have a firmer grasp of our finances, now and for the future. But we just don’t understand the titbits of information we read. When you learn about financial planning – in a class, from a book or just from reading the financial pages of the newspaper – this anxiety will begin to lift. You can think about your finances without getting a knot in your stomach and you can plan your financial future with greater clarity.
Those who don’t seek out a financial education are missing out. They miss out on investment opportunities. They don’t plan adequately for the future. And they don’t make their money go that bit further day to day. Set out to learn about your finances little by little and you’re sure to feel much more confident about making financial decisions that benefit you in the present and the future too.