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It is very important to impart financial education to students in order to teach them the importance of money and help them to take wise financial decisions. Financial literacy is imperative because it helps a student save their money, budget wisely as well as invest smartly. Financial education is vital to protect your finances to the best of your ability in order to evade various prevalent threats that pose a risk. It is imperative because it provides a student with the requisite knowledge and financial skills that they require to effectively manage money. Without it, our financial decisions and the subsequent actions that we take will lack a solid foundation, preventing success and leading to dire consequences. In America, credit card debt has reached its pinnacle with forty percent of citizens unable to afford a $400 for emergencies. It is reported that almost half of Americans do not expect to have sufficient money for retirement. Financial literacy thus helps you plan for the future, assists you in meeting your financial goals, supports you during times of financial adversity, help you to thrive rather than survive and also help you improve your relationships, marriage, careers and hobbies. Financial literacy thus provides life skills to youngsters which they can use as adults.

Key concepts that help to improve financial literacy:

  1.  The Basics of Budgeting: Creating a budget and maintaining it is one of the best way to control your finances as it hold you accountable and keeps a track of what you spend.
  2. Understanding Interest Rates: It is important to learn about interest and comprehend the concept compound interest because it will help you save more as well as make you understand the difference between borrowing a small amount of money and paying back a lot more than what you had borrowed for years.
  3. Prioritizing Saving: Saving is an important aspect of financial literacy but majority of students do not prioritize this aspect. They don’t plan for retirement as it appears very far off. Learning the art of saving can help you acquire the knowledge, set of skills and practice that you will need throughout your life. Mastering the art of saving comes with practice, patience and diligence, qualities you will develop while learning to save which will in turn bring you peace of mind.
  4. Credit-Debt Cycle Traps: It is important to acquire knowledge on debt earlier in life than later. It is very important to have adequate knowledge about the concepts and tools that are behind responsible credit practices as early on in life as possible.
  5. Identity Theft Issues & Safety: In this era of digitalization, identity theft and stealing of sensitive information is more widespread than ever. Since almost everything is digital and with almost everybody having shopped online at some point in their lives, your financial information is at a risk and is more susceptible to fraud. Understanding this scenario, and taking preventative measures, like protecting your password and limiting the amount of information shared online can lead to maintaining safe accounts.

Importance of Financial Literacy

Savings, whether they are for short term purposes or for long term purposes help you to accomplish your goals. Financial literacy is very important because financial education teaches an individual how to efficiently handle their finances in such a way that they are able to realize more goals, and reach their existing goals faster. If students gain an insight to the workings of a financial system at an early age or acquire a comprehensive knowledge about finances even later in life, they can amend their poor decision and rectify their mistakes and start planning again for their future. They can overcome their mistakes and take the requisite steps to build a better and a financially stable life for their family and themselves.

Financial literacy is imperative because it encompasses almost every aspect of the life of a person. Unfortunately we live in a capitalist society and hence it helps to know as much as possible about financial literacy in order to provide a stable future to their family and to themselves. Financial literacy is thus extremely vital because it helps a person to comprehend and maximize their income. It helps to transform the lives of people and that is why it is so considered so essential and important. With an increase in financial income, financial education helps an individual to make a transition from simply surviving to thriving.

Financial literacy ensures that you have sufficient and adequate resources to support your daily needs in your pursuit to leading a secure life. Financial literacy is thus extremely important because gaining a comprehensive knowledge about finances and developing an insight in your finances percolates into almost every area of your life, regardless of whether you like it or not. Thus if a person does not understand the world of finances, or do not ask the important and relevant questions, you may be at a major disadvantage which might prevent you from attaining financial success.

 

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