Education is the key to success, and financial education is no different. Financial literacy means having the skills and knowledge to make informed decisions about managing your money. People with financial literacy skills make better financial decisions and manage money better than those without these skills. Therefore, increasing your financial literacy skills can also help to get you out of debt.
Here’s how financial education can help you with your money management skills:
Increases understanding about money
Knowledge is power, especially when it comes to wiping out debt. Financial education can help you better understand the central financial products that you’ll encounter during your life, such as mortgages, bank accounts, investments, retirement savings, credit cards and loans.
Additionally, financial education will help you to grasp and understand basic financial concepts like interest, compound interest, return on investment and diversification. When you’re able to understand the basics, getting yourself out of debt becomes that much easier.
Improves financial choices
It’s the choices you make that get you into debt trouble in the first place, but when you’re financially literate, you have the confidence and knowledge to make better choices. For example, you might realize that living away from home during post-secondary will significantly add to your student debt, and so you opt to live at home instead. It’s choices such as these that can cause us to go into debt for a long time – or to remain debt free.
Sharpens your focus
The skills learned through financial education can help you sharpen your focus when it comes to debt repayment. When you understand the process and the concepts, you can determine how to tackle your debt so that you pay the least amount of interest and become debt-free sooner.
There are many different kinds of strategies that you can implement to deal with debt. Meeting with a credit counsellor is a great first step towards your financial education.
Helps you roll with the punches
Financial literacy means having knowledge and knowledge means that you don’t have to feel anxiety when things don’t go exactly according to plan. The economy is always changing, the unemployment rate rises and falls, investments waiver – it’s just all part of the process. Feeling knowledgeable and confident about your financial decisions
helps you to remain calm, act appropriately and weather the storms as they come along. Rather than make your debt situation worse in times of uncertainty, you’ll know how to respond to the situation in such a way that you’re always moving in the right direction.
You stay out of debt longer
The old adage rings true: Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. The same goes for financial education.
One in five Canadians who filed for bankruptcy in 2018 was doing it for at least the second time. Credit counselling has a repeat rate of less than one per cent, versus a repeat rate of 22% for insolvency trustees.
The issue with bankruptcy is that it just wipes away your debt – at a huge cost – and doesn’t actually teach you how to properly manage money. When you know how to manage your money, you are more likely to make better choices and stay out of debt longer.
SolveYourDebts.com helps you to learn the skills and habits you need to manage your money over the long term. Our personalized credit counselling, budget mentoring, and financial education programs are designed to help you solve your debts and feel proud of how you did it. Schedule your free consultation today.