Financial Education: The Importance Of Financial Education

“Money is eighty percent behavior, twenty percent head knowledge. It’s what you do, not what you know.” (Dave Ramsay, 2015). Everyone needs a clear understanding of how to manage their money but it is also true that financial education helps one to develop understanding and skills in financial management that are necessary for an individual’s survival and success in the merciless commercial world today. Financial education can be better defined as the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. (Wikipedia, 2015)Financial education is increasingly important, and not just for investors

Of course people have always been responsible for managing their own finances on a day to day basis such as spend on shopping or saving for new furniture or how much to put aside for their future goals or to set them up in life however, but recent developments have made financial education and awareness increasingly important for financial well-being. The responsibility and risk for financial decisions that will have a major impact on an individual’s future life, are being shifted increasingly to workers and away from government and employers. As life expectancy is increasing, the fixed income question is particularly important as individuals will be enjoying longer periods of retirement. Individuals will not be able to choose the right savings or investments for themselves, and may be at risk of fraud, if they are not financially literate. But if individuals do become financially educated, they will be more likely to save and to challenge financial service providers to develop products that truly respond to their needs, and that should have positive effects on both investment levels and economic growth.Further on, getting financial education will not only help an individual for their future but also in this current world that is technology advanced. For example, when a person is financially educated he or she will be able to plan well for the available money to them such as of making budget

Financial education, often associated with increasing knowledge, may require a combination of information, skill building, and motivation to make the desired changes in behavior. The distinction between information and education is an especially important point for policymakers and program leaders making decisions about the allocation of resources. Financial education and awareness campaigns and learning tools for example, web sites or brochures, all important in their own way, may need to be coupled with audience-targeted motivational strategies to elicit the desired behavioral changes in financial management practices. It is also important to keep in mind that financial education is only one part of an economic development strategy. Financial education can serve to complement other policies that enable financial access, provide for substantive protection in the financial marketplace, and offer mechanisms for redress. Also, it is necessary to note that education may need to be accompanied by advising – although general education and financial education courses can be helpful, consumers need to apply what they learn to their families and their situations. In the end, personal finance is, after all, personal. Making the link between financial education and community economic development outcomes is a bit thornier. Logically, financially-educated consumers should make better