April is ‘Financial Literacy’ month. This is to spread awareness of the importance of this issue. It is the possession of a set of skills and knowledge that will allow an individual to make effective decisions on their fiances.
Some of you might be thinking – ‘Well, why is it important?’
You are right, why is it important. So without further ado, I give you 5 reasons.
- These skills allow you to make wise financial decisions, essentially ensuring that you do not hurt your future self. The understanding of the value of money can lead to financial decisions that work for you.
- Prevents you from falling into a cycle of perpetual debt. Essentially prevents you reaching the point where you ‘rob Peter to pay Paul.’ For those of you who do not understand this saying, it means you eliminate one debt to pay another. An example is taking a cash advance on a credit card to pay another bill and then use later income to cover the cash advance.
- Helps navigate times of emergency with less struggle. Sometimes it is during these times that an individual struggles to keep their head above water and might find themselves doing just about anything to keep from seeking. Unfortunately, there are companies and individuals waiting to take advantage of those who are in dire straits. Financial literacy can prevent this from happening.
- Stops the cycle of generational poverty. This is a bit of a hot topic in the media. Essentially, the skills you learn can be passed down to your children. This is seen in some of the wealthy families who have managed to keep, grow, and manage their wealth. If these families can do it, then the cycle of generational poverty can end.
- Increases the ability and knowledge to invest in other income streams. This helps build passive income streams, instead of only having one incomes, other streams can help survive times of emergency safely. It is essentially a lifeboat (passive income), if you lose your main income, you do not have to fret if your boat (main income) fails.