June 16, 2024

Why is financial education so important for teens?

When is the best time to learn about finances? It was yesterday, even better if you managed to build your financial knowledge from your teenage years. Financial education is important for anyone in the modern world, where everything is related to finances, from entertainment to business. You can not succeed without planning ahead, and you can not plan well unless you have the solid financial knowledge to support your goals. Learning financial dos and don’ts is especially useful from an early age. We will discuss why it is so important to learn financial skills from a young age in more detail below.

Habits that last

Habits can last for a lifetime. Because of this, gaining good habits in any field as soon as possible will reap the best results in the long run. It is hard to gain new useful habits as we age, and starting to learn financial literacy from the teenage years can affect our lives tremendously. Financial knowledge is especially important in online financial trading, where it plays a major role in becoming a successful trader. Make sure to check the trading resources below this article before jumping into the trading world. In today’s world, almost every field requires a well-defined financial plan for succeeding. From a scientific point of view, it takes less than 20 tries before something becomes a habit. Young children can learn faster and acquire habits more easily than adults. Besides good habits, there are other important aspects why financial literacy is critical to start from a young age.

Debts and how to avoid them

Debts are like a double-edged sword, they are very hard to pay back when mismanaged, and many people are starting to accumulate them right from their student years. It is critical to properly manage debts and avoid bad debts that are not contributing value to long-term financial goals. Traveling and entertainment are good and recommended, but taking a debt to do so is a very bad idea. How many times have we thought about returning to our young ages with today’s knowledge? Imagine if we could take a financial course and learn about personal finance and how to plan it properly, differentiate between bad debt and good debt, and so on from our teenage years. This is why teenagers who study finances will have much more chance for success later in life than those who ignore finances and their importance. People who are not educated in finances are often the prey of bad debts, as they fail to plan emergency exits for repaying their debts.

Personal finance and budgeting for teenagers

Personal Finance is critical in determining future financial success. It provides the knowledge base for creating a budget, saving money, reducing debt, investing, and building an emergency fund for future uses. Knowing this from their teenage years, the population can increase their chances of acquiring financial freedom and achieving goals.in western countries, there is a healthy practice of parents teaching their kids to work and earn money from a young age. It results in a developed country where most of the population is working and planning ahead much better than in poorer countries where education is at low levels.

Financial literacy reduces poverty

Financial knowledge also helps reduce poverty, and when kids start to learn about managing their finances from a young age, they are less likely to be poor. This affects the whole population of the country, where financial literacy is higher among teenagers. There are numerous studies done with the same result that increasing financial literacy has alleviated poverty effects. This is probably one of the most important findings about financial literacy, as it has a direct impact on quality of life for whole countries rather than only individuals. So, one way underdeveloped countries can thrive is to provide their population with high quality financial education from teenage years. It is amazing how little effort it takes to transform poor countries into powerful developed economies by just providing better education.

Summary

It is easier to acquire new positive habits at younger ages. Since almost half of the teenagers feel unprepared to finance their futures, starting financial education at teenage age becomes more critical. Habits last, and it is hard to remove bad habits, therefore it is critical to build helpful positive habits that will help teenagers in their adulthood. With proper financial knowledge right from a young age, they will handle personal finances much better, increasing their chances of acquiring financial freedom several times. Personal finance will teach teenagers to avoid bad debts and to invest in education and good career choices. Balancing work and life will be much easier when they are good at planning their budget for future activities. Research shows that increased financial literacy has positive effects in reducing poverty. This could be especially useful for developing countries that are struggling to provide their citizens with a higher quality of education and life in general. From all the information we have gathered so far, it is critical to teach teenagers financial literacy.

Resources:

Trading resources and education:  https://www.axiory.com/education

Illinois educational blog: https://blogs.illinois.edu/view/7550/558591870

Financial literacy in developing countries: https://borgenproject.org/improving-financial-literacy/#:~:text=Financial%20Literacy%20in%20Developing%20Countries&text=Data%20indicates%20that%20just%2054,lack%20access%20to%20banking%20institutions.

Half of teenagers feel unprepared: https://www.cnbc.com/2022/06/01/54percent-of-teens-feel-unprepared-to-finance-their-futures-survey-shows.html

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