Money is important to live a meaningful life. Unfortunately not very many people are literate enough to save enough money at the end of every month. With little to no knowledge of money-matters and control over expenses, these individuals end up living their life in debts. While it is not only individuals who are to be blamed for their incapability to handle money matters; the lack of financial knowledge is mostly the result of the schools and colleges who don’t teach them anything about money, it is the responsibility of every person to be financially literate to live a quality life.
As per the great thinkers and experts of financial matters around the world, it is unfortunate on the part of the schools and colleges to leave the students financially illiterate as schools are primarily designed to get jobs. “You don’t get enough financial education in schools and colleges unless you are a commerce or economics student,” says Brian, the leading financial planner in Canada. Hence, the best way to increase financial IQ is indeed investing in oneself reading a variety of books related to finance and economics.
Before getting started for it, you must know why it is important for you. Below are some points that help you understand the same:
1) It Helps You Avoid Debts: Financial literacy is important for the overall quality of human life. We as humans need money all the time. Our ability to manage our finances helps us stay away from debts. On the other hand, it is very difficult for someone having little or no knowledge of interest rates charged by various banks, how it works, how it is related to time, etc not to end up paying huge interests for loans. Such a person is likely to go bankrupt anytime soon whereas a person having enough knowledge of the same is very unlikely to face a money crisis.
As per the financial experts such as Poncelet and others, not very many people know about the functioning of banks and charges for various services and hence they must be getting charged for some services that they may not be even aware of.
2) It Helps You Make Right Budgets: Budgeting is important to maintain a balance between your expenses and earnings. A financially literate person always knows the benefits of having a required budget before spending money on anything. Budget making is one of the most crucial skills that can help anyone save a good amount of money every month. On the other hand, one who does not practice budget making is likely to overspend.
3) It Helps You Prioritize Your Goals: Our goals are entirely dependent on our ability to prioritize our goals. Financial knowledge helps us understand and prioritize our financial goals. Due to the non-prioritization of the goals, many people may get themselves confused, disorganized and hence inefficient. On the other hand, prioritizing a goal helps us stay focused on one goal at a time which increases our focus and hence makes us more efficient in achieving our goals.
4) It Helps Us Understand The Idea Of Passive Money: It is not uncommon for us not to understand the idea of passive income as we are always working actively towards earning money. As per the studies of the experts, the people who are having enough knowledge about financial matters and how money works understand the importance and power of passive income.
This is why some of the richest persons in the world are not the ones who are working actively for money; instead, they are the ones who have employed money to work for them. As the name suggests passive money or income is the money which we earn when we are not working for it. For example, renting the houses, writing blogs, etc
Conclusion: Money is important to live a meaningful life. Unfortunately not very many people are literate enough to save enough money at the end of the month. This is why financial IQ is so important. Before getting started working towards increasing your financial knowledge, you must know why it is important for you in the first place. Financial knowledge helps you avoid debts and going bankrupt, it helps you make the right budgets, helps you prioritize your goals, helps you understand the idea of passive money, etc.As per the studies of experts such as Brian Poncelet, the people who are having enough knowledge about financial matters and how money works understand the importance and power of passive income early on in their lives.