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 is the ability to understand and apply different financial skills effectively, including personal financial management, budgeting, and investing.
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.
I am Italian; in Italy only 37% of adults have at least a minimal knowledge of finance, according to the latest survey conducted by Standard and Poor's and the World Bank. The financial literacy rate is 68% in Canada, 67% in the UK, 66% in Germany, 64% in Australia, 57% in the US, 52% in France and 49% in Spain. The best in the world are the Scandinavian countries, which together boast 71% of the population knowing finance at a basic level.
The analysis covered concepts such as the ability to calculate, risk diversification, inflation and interest. It was therefore not a question of high finance concepts, but of competence in the most basic economic concepts that are nevertheless important in everyday life. Basic concepts that should be part of the common vocabulary of the average person. And yet, this is not the case.
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 periods of crisis and uncertainty such as the current one linked to the COVID-19 emergency. 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. I have received many e-mails over the years from people asking for help on how to improve their financial lives. I was very excited to share my information, skills and expertise. So I created a completely free financial journey that can help everyone how to improve their personal financial management, to understand correctly how to grow financially through investments.
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Financial education is the ability to understand and apply different financial skills effectively, including personal financial management, budgeting, and investing.