If I were to stop people on the street and ask them what financial education is, I think I would get a lot of different answers depending on who I spoke to: how to save money, how to keep a household budget with income and expenditure, how to use a credit card wisely and correctly, how to invest their savings, etc.
Financial education can be defined as “the process by which financial consumers/investors improve their understanding of financial products, concepts and risks and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being” (OECD, July 2005).
Today, in the internet age, we can find everything online, both valid information and other content which is less so. The possibility of growing and gathering information is within everyone's reach. However, there is still a lack of financial education.
The United States ranks 14th in financial education; much worse my own country, Italy, is far worse in 63rd place, behind Zimbabwe and Togo. With the exception of a few countries, there is a lack of culture which teaches about investing, which in turn leads people to be wary of any form of financial instruments. As a result, this makes people see trading, and investment in general, as a gambler’s game, or worse, a scam; thus they prefer to keep their money under their mattress or in their bank account (which really, is the same thing).
The reality is that everyone should save some of their income and invest that money to ensure a brighter future. Financial markets are a great opportunity to increase personal wealth, but only a few know how to exploit it. Having financial knowledge translates into knowing how to plan one's money, which means that a person can face moments of crisis with less anxiety.
I was struck by a pre-Covid survey showing that 36.6% of people do not have enough money to cope with more than two months without income, and two out of ten households could not cope going one month without a steady income. Young people and people with lower education are among the most penalised.
Today, three out of ten households would find it difficult to cope with an unexpected expense and 35% of people feel anxious and uneasy about their financial situation. This happens because there is a lack of savings and investment culture.
Financial skills have a profound impact on people's quality of life and are crucial for coping with the current crisis and uncertainty linked to the COVID-19 emergency. This is why my advice is to see the world of investments with different eyes because, contrary to what many people think, they are a great resource that can be exploited to improve our lives financially speaking.
You need to study and increase your financial education. I am a trader; I have been investing and speculating in the financial markets for over 25 years. I deal, particularly with currencies and commodities. In response to numerous requests from people who wanted me to teach them how to trade correctly, I have written a number of books that explain, among other things, how to manage risk by minimising it. Yes, because what most people ignore is that you have to invest by establishing in advance how much you are willing to risk.
My advice to start learning more about trading is to click on the button below and download my free PDF that explains the behind the scenes of a trading operation. I am sure that afterwards you will look at trading with different eyes, and change your mind about investing in the financial markets.