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Personal finance is a vital skill that is quintessential for leading a secure, happy, and healthy life. This content helps you to know why is the knowledge of personal finance important for students. Every student must be thorough with concepts, such as debt, saving, budgeting, and investing, as these will impact every aspect of your life and can make a difference in your financial condition. When you have the requisite financial literally, you will have the skills and knowledge for effective money management. Sans this literally, the actions and the decisions you make might not prove viable for you.
Because students are not given financial literacy in school, they experience dire consequences when they grow up. Some such consequences seen in the world today are:
- Credit card debt has reached its all-time high. About thirty-eight percent of students in an American household have debts. Of course, certain debts, such as student loans or mortgages, are good loans, but credit card debt is surely not good. Thus, schools need to train the students about the dangers of credit card debt, ways to pay them off faster while minimizing the interest cost.
- About 1/3rd of students in America do not have any funds needed to retire comfortably. Let say, post-retirement; you will live for another three decades. So, for comfortably passing this time, you must have saved at least $1 million. Thus, it is vital to ensure that you start saving for your retirement at the earliest. But, sadly, not many do that, as they are not taught the vitality of compound interest and the time value of money.
- Every four in ten people in America are unable to afford an emergency expense of $400. Experiencing a medical emergency or sudden job loss, sans any substantial savings, can be quite devastating. Hence, knowledge of maintaining an emergency fund can help avoid this.
- Millions of students globally commence their careers with major debt, mainly from student loans that often leave them crippling for many years to follow. Hence, several years are spent in getting rid of this debt. Naturally, when you spend a chunk of your income on repaying the debt, you will have less left to save. Thus, it is vital to have an understanding of the debt and its management. Schools must teach students how to pay for colleges and never borrow more than what they can afford.
From the statistics above, there is no element of surprise in the fact that about 2/3rd of Americans tend to fail, even in the most fundamental financial literacy test. This guide below will brief you on why the knowledge of personal finance is quintessential for students.
Money is the backbone of everything
As children cross 18, they are directly thrust into the world, wherein every step they take, from their graduation to the retirement day, will directly impact their financial condition. To learn budgeting and a thorough financial management, it is essential to be careful with your accountancy and financial education studies in school or college. If you wish to know the drill better, you have experts at TopAssignmentExperts to guide you. They will not just assist you with your assignments but will also help you better develop the concepts.
Every little decision in life – be it starting a career, buying a new house, having children, or getting married, will depend on your financial situation. As a matter of fact, it is not just the significant life decisions where financial literacy is pivotal. For your everyday choices, too, finances will have a vital role to play. From traveling to where you eat, negotiating prices, or hanging out with friends, you will have financial decisions involved in everything. If you do not have the education and experience to make these decisions, losses can be massive.
Financial illiteracy can bring dire consequences
For adults and students, the leading cause of stress is the inability to manage their finances well. Almost every one of us has experienced this stress at one point in time or other. As a matter of fact, even the wealthiest people have been through this trauma. Shortage of savings and debt can result in major hardships in a person’s life. Sometimes, financial issues can aggravate and result in life-altering consequences, such as bankruptcy, poor health, divorce, and depression. If your school is not making you financially literate, you must attempt to do it at your end. However, if your long and draining math assignments and tight schedule in school do not leave you with ample time for it, you have experts at EduWorldUSA and ThanksForTheHelp to help you with your tasks while you work towards your financial literacy.
Financial literacy can help you lead a healthy life
In a recent study, it was found that over 50 percent of millennials, 43 percent of Gen Z, and 26 percent of Gen X and older, believe that their knowledge of finance is curtailing them from making progress in life. In all honesty, there is no truer fact than this. When you do not have ample financial knowledge, you fail to work to your true potential. There are multiple pros of having adequate financial education. These include:
- When you have ample financial literacy, it motivates you to save better. What if you just graduated from college, and begin saving? Wouldn’t life be easier for you going forward? It sure would be.
- Knowledge of budgeting makes you more responsible and aware. When someone has a budget, which they actively follow, it helps them keep a tab on their spending. At all points in time, they will know how much they have available. For this, you can also download some of the best budgeting tools to simplify the task for you. This will enable you to make better spending decisions.
- A better job is equivalent to better money. Thus, your debt will be less, and your savings will be more.
- People who make smart financial decisions have a better credit score. A good credit score is beneficial for your whole life and in different aspects of life, such as applying for a credit card, getting a job, buying a new car, investing in a home, renting an apartment, signing up for a power bill, or getting insurance. When your credit score is good, you will save thousands of dollars, which would have gone away as interest spending.
- Thorough money management also betters your financial health and builds a positive outlook towards money. When your attitude around money is positive, it will also weave your character better, and you will be driven to do more for the less fortunate.
So, these are all the reasons why knowledge of personal finance is vital for students. As we discussed above, development should start right in college. Hence, if you feel you cannot balance your studies and develop financial literacy, you can seek ways to quicken your study, but this should not compromise your grades. So, give yourself ample practice of the content. There are question banks available at Unifolks to provide you with the necessary training.