Did you know October is National Economic Education Month? Economic education is important for everyone because we all have to deal with money, and most of us worry about it.
Despite this, many people have little understanding of how credit, debt, and finances work, which leads to poor economic decisions that create excessive debt or low credit for many years.
Economic education, sometimes called financial literacy, is the ability to understand and effectively use various economic and financial concepts, such as debt, budgeting, saving, and investing, to have an overall sense of financial well-being.
There are five reasons economic education is important:
- Managing money effectively leads to a more secure future
- Saving and investment solutions are ever-changing and complex
- Understanding finances protects you from financial crises
- Good financial literacy may impact your career prospects
- Education increases your overall well-being
The good news is anyone can increase their economic education.
1. Managing Money Effectively Leads to a More Secure Future
Nearly 50% of Americans don’t have enough money for a comfortable retirement. Which 50% are you in currently? If you can’t afford a comfortable retirement, learning more about how finances work will benefit you.
Once you learn to manage your budget (there are many ways), you can track your spending, balance expenses and savings, establish an emergency fund, and plan for retirement.
2. Saving and Investment Solutions are Ever-Changing and Complex
Economic education is critical to understanding savings and investment, too — in part because things in the market are always changing. For example, 20 years ago, no one could have predicted cryptocurrency.
Savings plans like IRAs and 401ks and investments like stocks, bonds, and property, are intimidating if you don’t understand them. To fully leverage savings and investments options, including cryptocurrency developments, you need an economic education.
3. Understanding Finances Protects You from Financial Crises
Learning how to find low interest rates for borrowing, eliminate your debts, and establish savings, even on a limited budget, can help you avoid financial crises like spiraling debt, overspending, and bankruptcy.
Financial experts recommend having at least six months of living expenses in savings. With good financial literacy, you can understand how to achieve this even if your income is below average for your area.
4. Good Financial Literacy May Impact Your Career Prospects
If your income is part of your financial equation, it may impact your career choices, especially if you are a working-age student considering which career path to follow. Financial literacy is also a marketable skill, and when you’re less stressed about finances, you’re less distracted at work.
5. Education Increases Your Overall Well Being
Today, 53% of adults stress over finances. Stress negatively affects your overall well-being. However, by understanding your finances better and budgeting, saving, and investing, you can be more relaxed and enjoy lower stress levels.
Take Control of Your Finances Today
Enhancing your economic education to understand and conquer your finances can transform your life for the better. It leads to less stress and a brighter, more stable future, even in retirement.