Money is one of the most important things in life; the more money someone has, the more freedoms they effectively have since they are more able to make choices to live where and how they want. Some people are fortunate enough to inherit vast sums of money from family members or spouses, but most of us aren’t that lucky. Bill Gates, for example, has so much money that he doesn’t have to be financially literate; he is, of course, but everyone who lives paycheck-to-paycheck or close to it should be well-informed about personal finance.
There are several reasons why you and everybody else on the planet should know personal finance inside and out. Unfortunately, in the United States, barely more than 50 percent of adults are financial literate, says Standard and Poor’s Rating Services Survey “Financial Literacy Around the World.” The United States is both the wealthiest country in terms of gross domestic product and has the highest number of billionaires residing in the country, yet we’re far behind other countries when it comes to teaching and understanding financial literacy.
Even though so few Americans are financially literate, the basics of personal finance – everything someone would need to know to make responsible decisions – are not difficult to understand.
You’ll avoid frauds
If someone is financially literate, they are responsible in their decision-making as far as money and debt are concerned. People who are financially literate should be able to know differences between checking and savings accounts, how to calculate interest, and what inflation is. Thanks to this knowledge, if you’re financially literate, you’re much less likely to fall victim to some kind of financial fraud. You understand how to keep your personal information secure, avoid any investments that seem too good to be true, and are aware of various other facts that make it harder for you to fall victim to scams.
It provides comfort and a sense of security
Once someone is caught up on personal finance, they are less likely to feel anxiety related to money problems, have to borrow money, or waste money. All of your financial health improves as you educate yourself on personal finance.
Not only are people better off if they know about personal finance; they can talk about financial information and offer advice to their friends. The more common personal finance becomes in society, the more likely parents will be to pass the knowledge onto their kids and set them up for financial success.
Planning for retirement is a lot easier
Once someone learns about personal finance, they can then reasonably explore the world of financial investments and actually understand what’s going on. Investing is a personal finance topic many people lack understanding of, but if you work on building up your foundation of knowledge of personal finance, you’ll eventually see how much easier it is to plan for retirement once you have a greater understanding of investing and your options.