Financial literacy is a skill that we should all be concerned about. It’s not just teachable in the classroom, but in our homes too. When it comes to understanding how to manage money, and how your financial decisions will impact your life.
This article explores what financial literacy is, why it’s so important for children and adults alike, and what can be done to promote it.
What is Financial Literacy?
Financial literacy is defined as the knowledge and skills we need to make sound financial decisions throughout our lives. It’s important to note that financial literacy isn’t just about personal finance, but it covers a range of areas, including government and social policy, employment and workplace issues, money management, credit and debt management.
What are the skills that are needed to be financially literate?
To be financially literate, you need to:
- Have a good understanding of your financial situation and your options as they arise. You can’t make good financial decisions without clarity.
- Understand how key issues such as income, expenditure, debt and savings affect you on a day-to-day basis and in the long term. This requires an understanding of concepts such as compound interest, inflation and opportunity costs. It is essential to understand household budgeting, especially if you have a family to support. Understanding how credit works will help you manage your finances sensibly over time and avoid getting into debt.
- Have the technical skills to manage your money effectively. You will need to be able to read bank statements and budgets, as well as credit card and loan terms, and understand how to use basic spreadsheet software.
Why is Financial Literacy Important For Students?
Financial Literacy for students is important because it is needed for so many reasons. This ranges from helping students to manage their personal finances to providing the skills needed to be successful in a changing economic environment.
Financial literacy is crucial for students who are starting out on their careers. Without it, they will struggle in a job that requires more complicated financial knowledge and planning.
It’s also important for self-employed individuals to be financially literate, as they have no supervisors or managers telling them exactly what they need to do; this means there can be an element of trial and error involved in managing your money, without any set guidelines.
Financial literacy will help children in school as well. Financial literacy is a necessary skill for all children, young and old, so it’s not just for those who want to go on to university or college as teaching kids about money and finance will help them to deal with any crisis in future.
Without financial skills, it can be difficult for them to manage their money successfully, especially when it comes to paying for stationery and clothes. It can also make the transition into adulthood a lot more difficult, as they will struggle with key financial decisions such as how much they should spend on rent each month, how much they should save each month and how their money might be best invested.
If you are a parent and you are concerned about their financial literacy then you should definitely check out Upsurge. Upsurge is the best platform which awares about financial literacy for students. It will definitely help them to be financially independent during their teenage years.