Why financial education is important, from saving to paying off debt

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To achieve financial success, knowledge is key.

Yet many Americans lack financial education. That can affect everything from the amount of money saved to the debt owed.

The situation is serious for more than one. More than half of Americans cannot cover a $1,000 emergency expenses with savings, a survey from January bank fee found. Meanwhile, about 20% of employees run out of money before your next paycheck, according to Salary Finance. That’s an increase from 15% last year.

Meanwhile, American adults answered only 50% of the questions correctly in the TIAA Institute-GFLEC Personal Finance Index in 2021, an outstanding measure of financial education. That is 2 percentage points less than the previous year.

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“Financial education can help Americans feel confident in the decisions they make every day,” the NFL linebacker said. Brandon Copelandwho teaches a personal finance class at his alma mater, the University of Pennsylvania.

“In order to expect success in anything I do, I must first understand the rules and guidelines of that game,” he added. “The same applies to understanding money and how it works.”

building good habits

These days, Americans are still dealing with the fallout from the COVID-19 pandemic and the resulting inflation, which is costing the average American household a Additional $296 per monthfound an analysis by Moody’s Analytics.

However, there will always be something that can disturb your life, he said here morrisonPresident and CEO of the Council for Economic Education.

“There are a lot of things that can affect your income or the world around us, but making a decision in the moment isn’t really going to be that helpful,” he said.

“Having developed the good habits you need early in life…will help you get through all those changes.”

Those behaviors include understanding where you stand financially, budgeting, and saving for emergencies.

save and invest

Knowledge is also power when it comes to investing. while negotiating meme stocks and cryptocurrency has become popular, it’s important to remember that saving for the long term is vital to your financial health, said a certified financial planner Cathy Curtisfounder and CEO of Curtis Financial Planning in Oakland, California.

It was something she recently advised her new hairdresser about, after he confided in her about his anxiety about money and his concern about providing financial stability for his family. The stylist, in his 40s, invested in fintech stocks and cryptocurrencies through a popular trading app, but had no retirement savings or life insurance.

“If my stylist knew the basics about Roth [individual retirement accounts]for example, starting many years ago, I would be way ahead,” Curtis said.

“Without basic financial education about the power of compound interest, what types of savings and retirement accounts are available, and how important it is to start saving early, the financial future for many Americans is bleak.”

helping relationships

Couples may have different thoughts about money. When there is mismanagement of finances or a difference of opinion about how to use money, that can lead to conflict.

“A lot of couples struggle to talk about money and if there’s a lack of financial education in the couple, there could be a lot of financial mistakes,” the licensed marriage and family therapist said. Dr George JamesDirector of Innovation and Senior Staff Therapist at Council for Relationships, a nonprofit organization.

“Having a greater understanding of financial education can help relationships build a future and stay on the same page,” he added. “It can also reduce the amount of conflict.”

personal finance in schools

Proponents believe that it is important to start learning good financial habits at a young age and that there is no better place than school.

Twenty-five states require high school students to take personal finance courses, either in a stand-alone class or integrated into another course, depending on the Economic Education Council. In the past week, Florida he became the latest to sign a bill requiring a course to graduate.

Additionally, there are 46 personal finance bills currently pending in 21 states, according to The Next Gen Personal Finance Invoice Tracker.

The impact of that education can be seen in several studies, advocates argue. It has been shown to reduce the likelihood of using payday loans among young adults and is positively correlated with asset accumulation at 25 years old.

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