Essay On Importance Of Financial Education

he Importance of a Financial Education for Today's Youth

Providing financial education for today's youth presents the best possible opportunity for fiscal stability in the future. In 2007, the United States saw a record number of foreclosures in the real estate market. Though there were a number of factors contributing to this collapse, one large factor was the extension of high risk loans to unqualified borrowers. Predatory lenders were able to take advantage of borrowers, particularly first-time home buyers, who did not understand the implications of the debts they were taking on. Preventing a similar scenario requires more than just regulation. Education as a preventative measure can lead to more responsible borrowing, helping young people make wiser decisions about debt and savings. 

Education on Protecting Credit

A credit score is a difficult concept for a young person to understand without proper information. Credit scores today are the result of complicated formulas taking into account payment history, total debt, type of debts and other factors. If a young person elects to have a credit card, he or she may not fully understand the implications of opening this line of credit for the future. Today, it is common for a young person to require large loans for college. Starting to build a credit score at a young age will help these borrowers gain better rates and have more access to financing for the large loans they may need upon leaving home. 

Learning about Loans and Debts

It is easy to blame a predatory lender when the lending institution makes a loan against its better judgement. If you blame only the lender, you may think it is best to solve the problem through regulation. However, the borrower does carry some responsibility for signing a bad loan contract. A borrower should understand how the terms of a loan will affect his or her interest rate and total expense in the future. A borrower should know how to budget for monthly payments in order to understand when a loan is simply too large to be affordable on a given income. If the average borrower does not understand these things, then predatory lenders will always be able to prey on unknowledgeable people, even despite the best attempts at regulation.

Creating a Culture of Saving

It can take millions of dollars of savings over a lifetime to provide a stable retirement for the average American. The burden of saving can be great, but starting at a young age provides an individual the best chance at succeeding. Today, many companies offer retirement account match options upon hiring a new employee. A young person likely has not yet begun thinking about cost of living in his or her senior years. This person may forego the option to contribute and spend the money instead. Only later in life will the individual realize this was not the best plan. Helping a young person understand the importance of fiscal planning is the best way to assure that individual will engage in responsible saving for the future. 

Providing financial educationfor today's youth presents the best possible opportunity for fiscal stability in the future. In 2007, the United States saw a record number of foreclosures in the real estate market. Though there were a number of factors contributing to this collapse, one large factor was the extension of high risk loans to unqualified borrowers. Predatory lenders were able to take advantage of borrowers, particularly first-time home buyers, who did not understand the implications of the debts they were taking on. Preventing a similar scenario requires more than just regulation. Education as a preventative measure can lead to more responsible borrowing, helping young people make wiser decisions about debt and savings. 

Education on Protecting Credit

A credit score is a difficult concept for a young person to understand without proper information. Credit scores today are the result of complicated formulas taking into account payment history, total debt, type of debts and other factors. If a young person elects to have a credit card, they may not fully understand the implications of opening this line of credit for the future. Today, it is common for a young person to require large loans for college. Starting to build a credit score at a young age will help these borrowers gain better rates and have more access to financing for the large loans they may need upon leaving home. 

Learning about Loans and Debts

It is easy to blame a predatory lender when the lending institution makes a loan against its better judgement. If you blame only the lender, you may think it is best to solve the problem through regulation. However, the borrower does carry some responsibility for signing a bad loan contract. A borrower should understand how the terms of a loan will affect his or her interest rate and total expense in the future. A borrower should know how to budget for monthly payments in order to understand when a loan is simply too large to be affordable on a given income. If the average borrower does not understand these things, then predatory lenders will always be able to prey on unknowledgeable people, even despite the best attempts at regulation.

Creating a Culture of Saving

It can take millions of dollars of savings over a lifetime to provide a stable retirement for the average American. The burden of saving can be great, but starting at a young age provides an individual the best chance at succeeding. Today, many companies offer retirement account match options upon hiring a new employee. A young person likely has not yet begun thinking about cost of living in his or her senior years. This person may forego the option to contribute and spend the money instead. Only later in life will the individual realize this was not the best plan. Helping a young person understand the importance of fiscal planning is the best way to assure that individual will engage in responsible saving for the future. 

“Needs” versus “Wants” Form Topic of Financial Literacy Essay

Americans today have never been in greater need of a sound financial background. And according to a recent financial literacy essay published by the National Financial Educators Council, one of the keys to becoming money savvy is to learn how to separate “needs” from “wants.” Having a viable savings plan in place is the only way we will become able to reach our financial goals. And in order to save more money, we must know the difference between these two concepts.

A “need” is something we have to have, like food, shelter, clothing, water, and positive relationships with our fellow man. A “want” is something we wish we could have, but that we won’t die or suffer without. Examples of “wants” might be expensive cell phones, Rolex watches, Mercedes cars, 80” flat screen televisions, trips to Europe, leisure boats, or an Xbox One. Any financial literacy project that’s worth its salt will help people understand that they must use their income first to support “needs” and only purchase “wants” when they have extra money set aside.

The NFEC offers many such financial literacy tips to give people a head start toward financial success. This leading provider of personal finance t raining offers practical, fun, engaging lessons for all ages that guide individuals toward solid short- and long-term money planning. Many of the NFEC materials are available complimentary.

Some of the financial literacy tools the NFEC offers include curriculum packages, workshops, online and multimedia learning centers, student workbooks, games, and live celebrity events. These materials can be consumed one at a time, or combined into a full-scale financial literacy campaign or initiative to achieve a variety of objectives.

Research has shown that gaining a financial literacy education is perhaps the single best way to succeed in today’s uncertain economic climate. Distinguishing between needs and wants is just one step in that direction.

For those writing a financial literacy essay – forward it to the NFEC when you are complete and we may publish it for you.

Share This Article

0 Replies to “Essay On Importance Of Financial Education”

Lascia un Commento

L'indirizzo email non verrà pubblicato. I campi obbligatori sono contrassegnati *