One piece of advice, to enjoy a healthy economy it is not necessary to take the issue of financial education to a stratospheric level, this is not going to make you an economist …
This is about handling the basics well. We should all know them since from a young age they should have been prepared for us. The reality, we all know it, in very few schools is given the necessary importance, and in homes, unfortunately, this type of knowledge is conspicuous by its absence …
That said, while there is life there is hope, here are a few tips to help you get started:
1- Adapt expenses to income
Living in the generation of: “I want it, I buy it”, perhaps you have gotten used to prioritizing fulfilling your whims, and fast loans, loans, and credit cards are fuming.
However, the whole bush is not oregano, and if you don’t turn 180 degrees, you will soon be in debt up to your neck (there is nothing worse than this for your financial health).
In conclusion: Establish priorities, eliminate unnecessary expenses and never spend more than what you enter, it is more, you should start saving as if there were no tomorrow, all to be able to invest and see your money grow.
For this mission, nothing better than keeping a record of your income and expenses.
2- Know the financial language
To know what you are going to do, the first thing is to understand well what they are talking about. Terms such as “dividends”, “split”, “financial derivatives” or “portfolio” are basic and necessary.
The difference between credits and loans or the knowledge of more specific terms if you want to become a sophisticated investor.
3- Set financial goals
Living from day to day without allocating part of your income to any goal beyond the subsistence of the moment, is not a very smart philosophy.
Just like you set work goals (you want a promotion or specialize in an area), it is important to set financial goals.
4- Budgeting the money
To meet your financial goals, you need organization; calculate your expenses, and set priorities. Leave a margin of saving of the obtained gains.
5- Invest the money
Most likely, you have been instilled in saving as the best method of conserving money. But saving per se, will not help you too much …
Concepts such as inflation or the loss of value of paper money (as Americans tell you) mean that only saving means losing purchasing power (your money is worthless every day that passes).
Therefore, the most advisable thing is to acquire assets, financial, real estate, or of another nature, that due to their characteristics generate cash flow and can revalue over time.
6- Beware of debts
Debt has the power to ruin you financially. That said, not all debt is bad, the good one is that someone pays for you …
For example, imagine that you buy a real estate asset, rent it and the tenant pays you every month, with the money you receive you pay the bank to pay off the debt.
The latter has nothing to do with going into debt to pay for a vacation, buy a television, a car, etc.
As you can see, it is not that complicated …
The most important concepts of financial education are simple; manage your income and expenses properly, save, invest the surplus, and do not get into bad debt.
Why is financial education so important?
Posing the world as a duality where some have money and others do not, does not do much to change or improve your life condition.
T very one has financial problems; the more assets, the more problems (I will always prefer to have the problems associated with wealth rather than poverty), what difference, then, is those who achieve economic tuition success from those who do not?
Your financial agility, financial education is not about memorizing rules or formulas, but about developing skills, skills that allow you to intelligently handle yourself in the world of money and finance.
for more Finance blogs check out our Economy Archives.
When to start with financial education?
Financial education, like any skill we want to develop, is cultivated with practice and the creation of habits.
So at what age do you start? By the time you get your first coin, it’s too late for us (if you’re reading this blog, you’ve probably already left the primary education cycle behind), but what about our children, nephews, grandchildren …
Many people will say; what difference does it make, he’s just a kid, he’s just a coin. Where do you think a person’s financial life begins? Exactly, with your first coin, you don’t have to wait until you’re forty and broke to start learning about money and personal finance.
Financial education in childhood is important, that’s my opinion. I still remember, in my student years, I had to learn all the rivers in Spain, all the fucking verb conjugations, square roots, subject and predicate, lots of things that I have never used again …
I’m not saying that these things are not useful (at least for me, for now, they have not been), the problem is that they did not teach me a word about money, zero … Nothing about how to get it, save it, protect it and multiply it.
The financial habits that are generated in adolescence tend to creep into maturity … The problem is that the responsibilities of a teenager are not the same as those of an adult.
If you keep wondering how to improve your financial education, after almost 2,500 words you will have realized, at least that has been my intention, that it depends on you, nobody is going to bring you a pill that when you take it, the problem is over.
If you yearn for more money, want to get out of debt, improve your investment skills, or simply want to be able to teach your children, so that they do not have to walk the same path as you, you know what you have to do.