Finance education has the power to transform lives and make financial dreams possible.
Despite its importance, most Brazilians continue to disregard this information.
Consider what Standard and Poor’s (S&P) global survey of financial literacy reveals, for example.
Brazilians rank modestly 74th out of 144 countries in the study, behind several economically poorer nations.
According to another survey released by the State, only 46% of Brazilians feel confident in setting long-term goals, and 52% of them are not aware of financial planning.
It is correct to say that, in terms of finance, discipline plays a greater role in results than education itself.
Because they are more informed and enlightened, people who have received financial education typically exhibit greater levels of discipline and financial success.
In this essay, we’ll define financial education, discuss its meaning, offer practical advice on how to change one’s relationship with money, and provide examples.
The subjects we will discuss going forward are the following:.
- What is financial literacy?
- Why do we need financial education?
- 14 recommendations for applying financial literacy.
- PILLARS OF FINANCIAL EDUCATION.
- How should you approach the study of finance?
- When exactly should I start my education?
- financial education books.
- Why is learning about finance important?
Keep reading to better understand how financial education works and discover the peace of mind you are looking for.
How does financial education work?
To manage money more consciously and intelligently, a person must seek or acquire financial education.
The idea is that learning becomes behaviors that result in a more prudent use of financial resources, resulting in prosperity.
People with a better understanding of money have a better understanding of financial concepts and products, according to the Organization for Economic Co-operation and Development (OECD).
Here at FIA, we believe that financial education should be a compulsory subject in schools, as well as in countries such as Japan and the Nordic regions.
We know that financial education can be studied in schools.
Why not adopt the strategy and execute it similarly or even better in Brazil, if it works in these other countries?
Putting Financial Education into Practice: 14 Tips
We already know what financial education is and its purposes.
But how to put this into practice?
It is possible that financial education develops gradually over time.
See top advice and find out how to get started.
- Strive to do your homework
Even if you don’t have time for in-depth research, make it a habit to read related blogs from time to time in addition to following economic news.
Recognize that circumstances can change and that today’s best assets may not be profitable tomorrow.
Every day, you can acquire new financial knowledge, but study is always necessary.
- Build a spreadsheet
All of your expenses should be listed on a spreadsheet that you create on paper or on a computer, as appropriate.
It starts with breakfast and ends with renting your apartment.
- Invest small sacrifices
We are not asking you to give up everything that is health-friendly and expensive.
But with some self-control, it is possible to cut some costs and set aside some money each month.
- Make a habit of applying monthly
Investigate investments that produce higher returns than savings and develop the practice of investing some of your monthly savings.
- Identify goals
Try to set goals like depositing at least X Reals in a specific app each month. And keep your commitment to it.
Compound interest calculators can be used to see how much money will be earned after ten years to help you stay motivated.
- Make good use of technology
To simplify the control of daily expenses, many applications for smartphones have been created.
Consequently, it is much simpler to update your spreadsheet.
- Economy
When tracking data recorded at the end of the month, breaking down expenses into categories will provide a wealth of insight and allow you to identify excellent areas for cost cutting.
- Cost containment
To be financially educated, one must be fully aware of their own spending. To avoid this, write everything down instead of relying on memory alone.
The ability to add, subtract, multiply and divide the variables and better understand which habits need to be controlled is the starting point for making more informed decisions.
- Investments and applications
Everyone knows that it is impossible to have a well-managed financial life without saving money.
Knowing which investments will increase your return on money is the next step.
- Opportunities and Threats
As the research of investment options involves the search for the best opportunities, a part of this item was addressed in the previous section.
But the identification we are talking about also has implications for adopting appropriate behaviors and mindsets, which is particularly important for entrepreneurs.
- Planning
It is a mistake in terms of financial education who spends their entire salary in a month to always live in the present.
It is essential to prepare for the future by setting aside money for the comfort of retirement, travel and financial independence.
- Establish Priority Expenses
In the same way that accounting is a fixed expense in companies, priorities determine how personal finances are configured.
Expenses such as water, electricity and internet are needs that we cannot live without or that we cannot postpone.
- Keep an emergency fund
As disciplined and far-sighted as we are, we can always count on one thing: the occurrence of unforeseen events.
The best way to deal with unexpected expenses is to keep a financial reserve that allows you to cover them without compromising priority expenses.
Decide on a monthly amount (maybe 10%) and save that amount every month.
- Develop a Diverse Portfolio
Never put all your eggs in one basket, as our grandparents always very wisely advised. Given that all would be lost if it fell, it makes sense.
The same goes for financial investments, where diversification reduces the risk of losses, especially for high-risk investments like stocks and bitcoins, among others.
After all, what is financial education for?
A person can apply everything we’ve discussed so far in their daily lives with the help of financial education.
Let’s be honest: those who don’t save money don’t because they don’t realize it’s a good habit.
She may not have realized the extent of damage she could suffer, say, if she had unforeseen expenses or lost her job.
This type of situation – which, although common, we do not wish for anyone – leads many people to seek loans or use the infamous overdraft, which has exorbitant interest rates.
This is where the snowball starts and it can be difficult to recover from it.
The inability to organize is another possibility.
She believes that her income is insufficient to cover her expenses, but all she really needs to do is tighten her budget.
By understanding the idea of financial education, you can be more judicious when shopping and apply logic to withdraw money.
The person encounters some bottlenecks as he organizes himself, in addition to small costs that, added up, add considerable value.
A positive spiral starts from there.
Savings are invested and begin to generate more income.
The individual has already formed the new habit of managing his money with more responsibility and is unlikely to return to the previous situation of tightness even after establishing this reserve.
What then is financial education if not a method that has the power to transform anyone’s life?
Fundamentals of Financial Education
Financial education is crucial for people with balanced accounts, as it can help them understand how to invest their money for the best possible return.
It’s the only way to get finances back on track for people who have a hard time meeting monthly obligations.
We can approach the situation similarly to building a house. The walls, ceiling and other structures will stay in place if the base is strong.
To help people restructure their finances based on four criteria, the 4 Pillars (4P) methodology was created by specialists in financial education.
Follow and understand the principles of financial education.
be alert.
We cannot leave where we are without first realizing our current situation and our goals for the future.
Thus, to define one or more goals, the first pillar that needs to be built is the understanding of our financial health.
Take a look at this simple illustration:.
Situation: Chronic debt of R$ 10,000.
Pay off that debt as your first goal.
Objective 2: Maintain a cash reserve.
Goal 3: Invest to start a business.
Record
Every business should monitor its cash flow on a daily basis to stay in control of its finances.
On a personal level, we can and should do the same to be fully aware of our financial situation, including where our money goes, where it comes from and how much we have saved.
Avoid thinking “off the top” when registering.
Firstly, no matter how good your memory is, you can never be too careful when it comes to such crucial numbers.
In addition, written records or electronically maintained spreadsheets are a useful source of reference, particularly when defining possible cost-cutting measures as needed.
Analysis
Spending less than you earn is a fundamental principle of financial education, correct?
The fact that a Brazilian’s salary does not cover all of their monthly expenses is one of the most frequent complaints from Brazilians.
While the average salary isn’t high, it’s still possible to do more with less if you’re disciplined.
In addition to the two pillars we’ve already covered, maintaining financial health requires regular reviews of expenses so that the budget can be adjusted.
After all, there would be no point in recording expenses if this record was never checked to find out where we were going wrong.
If that were the case, all control measures would be ineffective and we would only be tracking down financial indiscipline.
Conclude
With the room – the realization – added, the previous pillars create a stable tripod.
Here are the goals listed in the first pillar.
As you may have noticed, the objectives are always progressive because it is foreseen that a financial evolution will allow not only survival but also the investment of the surplus.
As a result, here’s some extra advice: Even if your financial situation is dire, set growth goals because that will help determine your direction.
You will be closer to your life goals if you understand how the pillars and financial education work.
What’s the best way to study finance?
You are researching financial education.
The internet is a great resource for learning more about this.
Ebooks, YouTube channels and blogs have a ton of useful content.
In addition, there are ways to acquire financial literacy on your own, which allow you to immediately start raising your standard of living.
But it goes without saying that independent study requires some self-control and discernment to know which sites have reliable information and which don’t.
There are some people who struggle with this type of search. No problem, there are other options.
By locating a facility that offers this type of course, you can pursue formal financial education study.
Remember that it is advisable to look for one of the FIA Business School courses if the objective is to improve the financial management of a company.
Choosing to work with a personal financial advisor is a final option.
For those who want to completely change the way they handle money, this is the best option.
Taking into account your profile and financial situation, the consultant will advise you in a personalized way.
The opportunities you missed and the bad habits you didn’t even know you had will surprise you.
And at what age should I start my studies?
We only have the present moment, according to philosophy.
When reading this information, adults should realize that the time has come to start managing their finances.
In addition, parents have the responsibility of teaching their children to better manage money, guiding them at home and requesting initiatives and activities from schools in this area.
Why pass up the opportunity if you can acquire financial knowledge and develop yourself?
We advise reading books in addition to using the internet, courses and a personal financial advisor.
Yes, reading is one of the few things so important for a person’s development.
And there is no shortage of books that instruct us on financial literacy.
We will highlight three remarkable works to simplify things for those who are starting in the subject.
Undoubtedly, each of them will contribute. You can see below.
Parents of different incomes
Since its publication in 1997, Robert Kiyosaki’s book has gone through more than 80 editions and millions of copies have been sold worldwide.
The author’s use of direct language to explain the need to invest in assets (which generate a return on investment) before spending on liabilities (which increase expenses) is the key to this huge success.
Intelligent couples grow together
The book is ideal for couples to read together and has already surpassed the 1 million copies mark (an incredible number for the Brazilian market).
Consultant Gustavo Cerbasi urges readers to discuss financial issues with their spouses in the article.
It also demonstrates how much simpler it is to maintain a high standard of living in the future when investments are combined.
The Zurich Axioms
This book by author Max Gunther describes how the Swiss helped make their nation one of the wealthiest in the world after World War II.
The author divides the lessons into 12 axioms that investors who seek high performance in their investments must follow.
It is not just the person who becomes aware who enjoys the advantages?
The more people seek financial education for themselves, the better for society as a whole.
Bad debt drops as consumer behavior improves in managing personal finances.
With more security, entrepreneurs can market their products under more advantageous conditions.
A person who has financial literacy is also able to consider new options.
For example, you can invest money in travel, sports, language lessons, etc., instead of just buying clothes. , which helps create a more diversified economy.
In addition, it will have better opportunities to spend money on personal development, improving professional skills and increasing the skill set of the country’s workforce.
The advantages of financial education are even clearer in the case of an entrepreneur.
With his finances and business management in order, he can expand his company, creating more jobs and raising more money for the government.
Not to mention, people who educate themselves about their finances tend to pass on the knowledge they learn to others.
Especially when we are talking about a father or mother who is in charge of a family and depends on everyone to use the money in order to promote peace in the home.
Conclusion
Based on our advice, we hope you can change your behavior for a healthier financial future.
When you reach this goal, you’ll feel secure in the knowledge that there will always be money available to cover unexpected expenses.
Many people find it a great relief to simply be out of debt after paying it off, which results in a much more restful night’s sleep.
You can better fulfill your dreams by investing in financial education.
Do you want to travel the world, own a beach house, or are you living somewhere that needs a significant makeover?
A well-planned financial life makes all of this possible.
You have just completed the first step – get informed and seek the first tips – reaching the end of this article.
The above advice should be written down and used like mantras. Although it takes discipline, the results will be worth it.
Learn more about financial education by clicking here