The importance of financial literacy cannot be stressed enough, yet the majority of people everywhere around the world lack it. The most interesting fact though is that most of those people think that they are financially literate. Perhaps that’s because almost anyone of age around the world manages their personal finances, so it’s possible for an individual to assume that they are doing it the right way. However, the rate at which bankruptcies and foreclosures are reported to paint the real picture.

Far too many people today lack the basic financial knowledge and therefore cannot manage their finances prudently. Financial markets and institutions in most cases aren’t helping the state of affairs. They are increasingly offering more complex financial instruments, thus making it more difficult for most people without adequate financial education to make the right choices. Individuals now bear the burden as far as financial decision making and associated risks are concerned.

With the increasing availability of credit, personal bankruptcies are on the rise because many individuals end up living beyond their means. Use of credit cards encourages most people to spend money they don’t have only to be left wit huge debts to pay.

Not everyone is getting mortgages fully understands the fine print while lenders hardly take the responsibility of advising individuals on the financial implications of their options. Due to lack of financial literacy, many people live to pay more fees for their loans and are left with little for their savings. Most transactions are nowadays done electronically and allow a great deal of conveniences for consumers.

It is very easy and fast to access savings accounts, especially via debit cards and mobile banking options. While for a financially well-educated individual that could offer the perfect opportunity to track how money is spent and make deliberate decisions to manage it better, for other people the convenience leads to uncontrolled spending.

Although financial literacy can be higher among individuals with high levels of income and education, ignorance on financial matters among them can still be as rampant as it among those with lower income and education levels. It is important to gain a financial education to be able to understand your finances at a higher level.

Savings and investments can be complex and require individuals to understand strategies they can effectively use to optimize their gains. Everyone needs to understand the importance of personal debt management, credit scores, insurance and pension savings. The complexity of financial issues will continue to increase just as the need to participate in a global economy increases.

Today more individuals are connecting globally often using non-traditional means to borrow, manage and transfer money. So there is even greater need for the current generation to acquire more advanced financial education than ever before. That can help take advantage of new opportunities to invest tax efficiently and even overcome challenges like a fraud.

Financial education is critical for improving financial decision making among individuals in all populations around the world. Nobody wants to be trapped in poverty or any financial challenges like debts. Investing in a manner that increases the chance of securing one’s financial future can only be enhanced with financial literacy. That’s what it means when saving and investing to accomplish things like buying a home, paying for higher education, or to have adequate savings for retirement. Education on financial matters even at a personal level is simply indispensable.

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