From spiking credit card debt to falling savings rates and low investments, the current generation’s personal finances are in a worrying state. Yet, what is more concerning is that many working adults lack an understanding of basic finances, thus exacerbating the problem.
But you needn’t wait till you begin working to learn about managing your finances. In fact, experts believe it is crucial to expand the focus of financial literacy and even include children and youths in the conversation.
Yes, finance was previously the domain of adult males, and even today, men make up the majority of those who own bank accounts, take out loans and participate in financial transactions. However, the youth booms in Africa, Asia and other parts of the world suggest that it is never too soon to learn about managing money via programmes like FinGreen.
But how young is too young? Here are some of the main reasons why individuals ought to begin their financial literacy journeys as early as possible:
1. Builds a Solid Foundation for the Future
Whether it is learning to play a musical instrument or swim, the skills acquired in our formative years tend to stick with us in adulthood. Hence, it stands to reason that a solid early education can lay the foundation for excellent long-term financial habits.
Best of all, studies have found that individuals who do well in lessons on finance and money are more likely to know how to spend prudently, save for emergencies and put aside cash for retirement. They are, additionally, better at financial planning, investing and recognising business opportunities.
2. Helps Instill Financial-Responsibility
An early financial education is also important for cultivating a responsible attitude towards money and avoiding the debt trap.
Essentially, it has been determined that children and young people don’t often recognise the link between work and income, and particularly struggle to understand borrowings and repayments. As such, early lessons on money can be a great tool for instilling financial responsibility and protecting against poor decision-making in the future.
3. Improves Financial Well-Being
According to several studies, there is a clear correlation between financial literacy and financial well-being. It has been found that the more savvy one is about finances, the more likely they are to pay off loans, acquire assets and live comfortably.
Yet, what is perhaps more important than purchases and securing good credit scores is that early financial education is able to provide people with the appropriate tools to deal with uncertainties and shocks later in life.
Incidentally, respondents to a recent survey claimed that they could have stayed in better financial health during the COVID-19 pandemic had they had more financial education.
4. Normalises Conversations About Money
In certain societies, it is considered rude and, sometimes, taboo to speak about money. This explains why large groups of people are ignorant about the topic and face socio-economic drawbacks as a result.
Financial literacy programmes in these societies will be able to dismantle social stigma related to conversations about income, expenses and savings. It would also remove irrational fears and help all persons recognise that being open about money leads to discussions about difficulties and challenges and, ultimately, to better finances.
5. Improves Confidence
Women and young persons generally have lower financial literacy than men, and this has been found to affect their confidence in managing money and planning for the future.
A sound financial early education that equips individuals with essential knowledge could significantly boost self-assurance and foster independence. It can also make one more adaptable in the face of economic challenges, enhance decision-making and improve communication skills.
Never Too Old or Too Young
To be clear, there is no upper age limit to acquiring a financial education. Indeed, programmes like FinGreen, by direct selling e-commerce leader QNET, have been designed to cut across the spectrum and empower individuals regardless of age, creed, gender or social class.
Even so, financial guidance from an early age helps instil good habits and essential skills that are crucial for success in today’s challenging economic climate.
