There are many definitions of financial education. I may not say each but many are true. There are many definitions according to many people. The definitions are different because financial education is not a small thing. A whole book can also not cover it all. Because financial education not only constitutes assets and liabilities which many people think. Many people think that financial education is just assets, liabilities, cash flow, debt, taxes but this mush is not at all. We can define it as Financial education is the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all their financial resources.
Financial education is the confluence of financial, credit, and debt management knowledge that is necessary to make financially responsible decisions — choices that are integral to our everyday lives. It is also called Financial Literacy. It is very important to know to make progress and get ahead in life.
You may know that or you may recognize people who win millions in the lottery by luck, but soon they get poor or the situation where they started. If you don’t, believe it or not, statistics show 70% of lottery winners end up broke and a third go on to declare bankruptcy, according to the National Endowment for Financial Education. So if you don’t want to be like them and do not be fake millionaires, you have to learn money managing skills which are in financial education.
If you want time and money freedom, you must acquire financial education. You may have listened about financial independence and financial freedom.
To be financially free, you have to be financially literate!
Do not want to be dependent on your current family, job, or the company you are working in? Of course, no one wants it. Everyone wants to be financially free. The truth is people want to be financially free, but they don’t want to be financially literate. And if we say them to be financially literate, they get disappointed.
Most people think that money is scarce but they don’t know that the world is full of money. But only with skills and knowledge can one acquire it. So to be financially free you have to be financially literate. But the thing is no school teaches us about finance. Or how to be rich. They don’t teach us financial education which matters most in our life.
3 Types of Education
“Academic” Education is generally defined as education that has learning as its primary purpose. The scholarly activities of a school or university, of or relating to a college, academy, school, or higher education institution, especially one for higher education. You can simply understand it as the education which is taught in schools and universities.
Professional Education is also called specialized knowledge. It is the education related to your field. Suppose you are in digital marketing. The knowledge you will acquire there, suppose SEO then it’s professional education. It is the education related to your field. It differs from person to person. As all are in the not same field. For digital marketers, the professional education will be different from a medical student.
Financial education is the ability to make smart financial decisions that result in desired outcomes. This is the most important education of our life. Because we take a financial decision in each aspect of our life. Finance is the thing which is one of the most essential things in the world. So we should know how to manage it and so we acquire financial education. It includes many foundations like money handling skill, assets, liabilities, cash flow, capital gains, time leverage, self financial/investment decisions, and many more like that.
Up to an extent, academic education does not contribute much to our life. As school bookish knowledge does not contribute much to our life. But professional education contributes very much to our life as we have the knowledge of the field in which we are working. But financial education is the education that contributes the most to our life. As if we are working we require financial education and if we are not then also we require that.
Why Financial Education?
Why financial education, why not financial education. If you take financial decisions in your everyday life, then why don’t you acquire financial education in your everyday life. To make good financial decisions, you have to acquire financial education. You can never be rich from your current state if you don’t acquire financial education. Being a millionaire is very very easy. But sustaining a millionaire is very very hard.
Many millionaires go broke because they don’t know how to sustain and manage their money. You can be a millionaire but you can’t sustain that position because you have not changed your poor mindset yet. To change it, you have to acquire financial education. You have to be financially literate.
What will be if you don’t acquire financial education?
If you don’t acquire financial education form now, then you will face the following problems:-
- You will never get out of the rat race
- You can never leave your 9–5 work
- Can’t multiply your money but you will start losing it
- Will never understand the concept of time leverage
- Inflation(a silent killer) will always kill you
- Will always adjust in your life
- Cannot handle your money properly
- Your pocket would be empty before 7 days of your paycheck
- You can never take good financial decisions
- You will always hang between fear and greed
- You will teach the same to your future generation to be financially illiterate
Why people don’t acquire financial education?
As you have already understood, how important is financial education, and many people know how important financial education is, but most of them don’t acquire it. Why? The thing is no school teaches us about finance. Or how to be rich. They don’t teach us financial education which matters most in our life. People know about finance and know-how is it some also know-how is it important but most of them don’t learn it.
As per today’s digital world, everything is available on the internet. I agree with that. If you want to acquire any kind of education in any topic, you can easily access that. You can also learn about finance for free or paying some amount of money. But there are free sources too. You can also buy some books like Rich Dad Poor Dad to enhance your financial skills. But a question comes” If there are so many resources, why don’t people acquire them”. People don’t acquire it not because of no resources but they don’t because of resourcefulness. I will list here mainly 2 reasons why people don’t acquire it even we have so many resources:-
#1 Conventional Freedom
Financial education is not conventionally Ok. Most people give you very wrong concepts about finance. There are many conventional concepts about money. When we are growing up we get to know about many things about money. The conventional concepts we get to know not only from our parents but also from some relatives. If we are small and we talk more about money then our parents just stop us.
The sentences which we hear many times are “Money does not grow on trees” and “Money is an evil as it breaks relationships”. These conventional concepts and beliefs stop people to learn more about finance and be financially independent.
Money does not grow on trees
Money does not grow on trees creates a kind of thinking in our mind that money is scarce in the world. This concept tells us that money is not easily earned, we have to work very hard to earn money that is why they do the job. But this is a poor mindset. The first step we can take to start our financial education is to change our mindset. Because there are already many wrong concepts about finances in many people’s minds. So first you have to change the concept which is in your mind.
Money is an evil
And also the concept that money is evil, and it breaks relationships. This concept is wrong because most of our problems can be solved by money. And even in the middle class and poor class families, most fights are because of money. These both are the concepts that many people know but it’s totally wrong. And because of these concepts only people don’t learn financial education and don’t be financially literate.
Negative Connotation towards Debt
Debt is not too bad then we hear of it. We hear many concepts about debt in our day-to-day life from many peoples. We listen to it from our relatives, our parents and sometimes even neighbours. Even big businesses have debt and it is not too wrong if you know how to use it. And that is financial education. In financial education, you learn about debt. But in our world, no one wants to learn about debt. Because there is a very bad concept in people’s minds about debt.
Self-esteem and Confort zone
Because of self-esteem and their comfort zone also people don’t acquire financial education. Self-esteem is your overall opinion of yourself — how you feel about your abilities and limitations. You are all of your mindset and confidence. If you have to be rich, you should have the confidence and attitude to be rich. You should not have much self-esteem but to achieve the financial freedom you should have financial confidence. You should leave your comfort zone. To be financially free you should leave your comfort zone. Without leaving your comfort zone, you cannot be financially free.
It does not mean that you sound take big loans now. It means you should have belief in yourself and be ready to take risks and accept failures. You should have to courage to leave your comfort zone. Because of not leaving their comfort zone and not having self-esteem, only many people don’t acquire financial education.
You may find this article interesting. If you want any course related to financial education, you must check out these courses.