Organizing personal finances is a task that requires time, methodology, and patience. The people who have managed to lead a successful and smooth financial life are those who have dedicated time and energy to budgeting, managing and planning their money, that is, learning finances. In short, they have managed to cultivate sufficient discipline.
Perseverance to develop financial education and continue to maintain and update it throughout their lives
At Lender Credit, aware of the importance of having a complete education in finance, we decided to collaborate by delivering 20 scholarships to participate in an online course on personal finance. This type of training is not usually taught in primary education, however, it is essential to develop healthy financial habits, such as savings, and to be able to maintain a balanced domestic economy at different stages of our lives. In fact, through the data we obtained from a study of nearly a thousand people after granting the scholarships, we found that 75.5% considered that an improvement in this area would have a positive impact on their domestic economy.
Why is basic financial education essential?
Financial education (or financial literacy) is the ability of an ordinary person to understand how money works in the current economic context and in the family environment, as well as the mechanisms that allow managing their personal finances to guarantee a quality of life. present and full future. According to a recent survey conducted by the Financial Industry Regulatory Authority (Inc.) in the United States, millennials, that is, those people who were born between 1974 and 1994, have a high number of irregular financial behaviors, among which are low levels of financial education, early indebtedness, and low savings capacity.
In Spain, the latest European report on Consumer Payments published by Intrum reflects that 46% of those over 50 are not able to save monthly and that one in three Spaniards considers that their domestic economy is worsening. Specifically, 28% of Spaniards live in poor households, that is, those whose expenses have exceeded their income in the last twelve months.
There are numerous reasons to learn finance
Even if they are simple concepts, but among the main ones is the decision-making well-founded in our personal economy in the face of the constant changes in the financial markets within an environment marked by volatility, job insecurity and low return on investments. Furthermore, the development of basic financial education favors the development of more sustainable and financially stable societies.
How does it affect the domestic economy?
Developing basic financial literacy and understanding of its application in home economics help people make better decisions about managing their income and savings. In this way, it is easier to control and regulate our expenses in order to plan the family goals that we have set ourselves (change house, change car, take a family trip) and manage the necessary resources to achieve a healthy family economy.
Another positive effect of learning finance is that it prepares those with entrepreneurial concerns by providing practical tools on entrepreneurial activity, especially for micro-enterprises. At a social level, this allows entrepreneurship to be promoted and to improve the perception of the role of the entrepreneur and companies.
In short, equipping individuals with financial knowledge is vital to help them make the right financial decisions and, consequently, to improve the standard of living and social welfare of a country.
Financial education for children: the key to establishing good habits
Although the economy seems a science that is reserved only for adults, the truth is that it is advisable to talk about finances with the smallest of the house and do it in a way that is interesting and entertaining to capture their interest. It is at the earliest ages that children are most likely to learn positive financial habits. It is essential that they understand the value of money from the earliest years, because this will give them the key to understanding the value of work, study, responsibility, etc.
Showing children basic concepts such as budgeting, spending, saving, will establish good practices for their adult life, very important in their personal development. At school, teachers can serve as a link, developing some subject of finances for children, which, together with the concepts learned intuitively at home, will offer better prospects for the future to the little ones. The scarce financial education brings with it serious consequences such as over-indebtedness, the absence of savings or inefficiency in the management of the domestic economy. That is why it is important that both from school, with specific finance subjects for children, and at home, the little ones begin to become familiar with simple notions of economics that help to establish good financial habits in their education.
Tips to properly manage personal finances
Next, we will give you a series of basic tools to organize family finances in a simple way:
Where we are: to start the analysis of our financial situation the first thing we have to determine is the starting point. What situation are we in? To balance our economic situation, we must include both assets (savings, property, payroll) and liabilities (debts and payments).
A spending diary, the best ally: at least during the first months it is important to write down in a diary everything you spend and what you spend it on. This routine will help you identify your consumption habits and which are the areas to which you spend the most money. From there, you can see which ones are essential and which are superfluous.
Set a monthly budget that includes savings habits: the best way to manage your personal finances is to establish a monthly budget. Living on a budget is almost the only way to guarantee that you will be able to face an unforeseen event or request a personal credit without major complications. Although at first it may be a bit difficult to comply strictly, think that it is like the gym or a diet, with willpower and consistency the results are really worth it.
Help yourself with online tools
nowadays, when the use of mobile phones is so widespread, there are very comfortable and intuitive applications to control our finances from anywhere and at any time. Apps like Fintonic for Android or Whallet for iPhone allow you to organize expenses and income by category, as well as make monthly reports to have a global vision of what our situation is at all times.