Why financial literacy is important at an early age and how younger generation can work on it.
Financial literacy can change the way we see our life in present and future. Here are some reasons why financial literacy is important from an early age.
The Covid-19 Pandemic has taught us importance of financial education. Pandemic endangered the lives of millions worldwide also changed many people's lives drastically by putting them into financial trouble.
Financial education is a basic life skill that has a direct impact on our future. Things such as Savings, financial management, investments in different asset classes and debt will lay a solid foundation for financial practices when given at an early age.
Learning about your finances and important financial skills at an early age offers many opportunities to use them in real life. If you already have a habit of writing daily expenses, saving money and spend money wisely then its great thing.
People who understand how money management can change our lives. Young people can start earning and investing at an early age and avoid future financial struggles.
Schools may not teach you how to make financial decisions. However, it is an important part of everyone's life. Below are some important things on which younger people can work on to get aware about their financial needs and investing.
Writing about your expenses :
If you want to understand money management, the first thing you need to do is 'write about your daily expenses'. It is very important to be careful about how much you earn and where you spend it. There are many apps available to help you.
Emergency fund :
Emergency Fund is very important to sustain any in any emergency situation. The current situation has made us realize that at any time in life we should have a three- to six-month expenses set aside as savings.
Understand about debt :
Understanding the concept of income, taxes and how debt works helps you to manage your finances better. A clear understanding of the good and bad debt and understanding the difference between assets and liabilities can help you grow your wealth. A home loan loan, for example, can help you save taxes, buy asset that grow value over time and can bring out cash flow in the form of rent.
Set goals :
The early you set goals of your life, the early you realize how much money you need in future. This will force you to plan your investments.
Impact of inflation :
Inflation have large impact on your savings. If you only save and not invest your money then you are going to lose value of that money over time. So investment is important and should be inflation proof.
Retirement plan :
To live comfortably post retirement, you need to save money and invest as soon as you start earning. One needs to work and plan for his/her financial freedom.
On the other hand, something like a car loan would keep you financially charged with monthly insurance, recurring fuel costs and depreciation over time.
Learn at your own pace. Take the time to understand your finances, not only to save but also to grow wealth.
There are several books, online videos, financial news papers, financial news channels, online communities and blogs on financial education.
Go ahead and start your journey towards financial literacy.
Post a Comment