7 Reasons to Invest in a Financial Education
Expats especially have to focus on their finances and work with many rules and regulations including domestic and international tax laws. However, anyone in any situation at any time can use a financial education. Financial literacy is defined as the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. But when it comes down to it, not that many people have a financial education. According to FINRA, the Financial Industry Regulatory Authority, less than 40 percent of Americans show high levels of financial literacy and know how much they need in order to retire, have an emergency fund, or are saving for their kids’ education. With all this being said, let’s take a look at the top 7 reasons why financial education could be your best investment.
1. Consumers are Becoming More Responsible for their Financial Decisions
Nowadays, consumers are more and more becoming responsible for their financial decisions. An example of this is the state of retirement planning. In decades’ past, companies had the breadth of retirement planning with pension plans. Nowadays, more companies offer 401ks than pension plans where consumers are in charge of their own investments-- and retirements. With your ability to weave through financial decisions having more of an effect, becoming financially literate can be really beneficial.
Source: FINRA
2. The World of Finance is Complex
Source: FINRA
There are many ways you can be involved in finance. Whether it's investing in the stock market, bonds, annuities, getting an auto loan, refinancing a home, taking out a mortgage-- the possibilities are endless. Most-- if not all-- of these entities are complex. You have to deal with interest, maturation, on top of many other complicated financial vehicles. Being an expat adds another layer of challenges: fluctuating exchange rates, assets in various currencies cross-border pension planning, etc.Getting a financial education will help you navigate these easier and will allow you to make well-informed decisions and therefore furthering your bottom line.
3. Social Security is Coming to an End
In past generations, social security was a surefire way to add to your retirement. Not today. According to the Social Security Board of Trustees, by the year 2033, the Social Security Trust Fund may be depleted. Having a financial education will greatly help those who would have used social security now find and understand a better way to fund retirement.
4. You may Live Longer
Since the middle of the 20th century, the average worldwide life expectancy has increased considerably. Taking this into account, it is best to plan late into your 80’s. With all this extra time, a financial education will go a long way-- whether it's retirement for yourself or ensuring your loved ones are set for life when you are gone.
5. A Dynamic Landscape
Life Expectancy per region
Source: Worldbank.org, last updated 6 July 2018
With global financial landscape more accessible than ever, it is important to have a financial education. In addition, the way financial trades are made has been changing-- trades can now be made electronic and there are more changes we do not even know about. Getting a good baseline knowledge of the current market will allow you to better interpret the ever-changing dynamic landscape.
6. So Many Choices
Nowadays there are just so many choices when it comes to financial decisions and/or products. There are credit card companies, banks, unions, loans, brokerage firms, insurance, mortgage companies-- just to name a few. Consequently, having a financial education will allow you to make better decisions and pick the institutions that are right for you. A financial education gives you the lens you require to evaluate your options.
7. For Your Family
A financial education is knowledge of the area. And knowledge is priceless. Knowledge is also something you can pass down to your family. Teach your children from a young age about how to handle money, how to start saving, about financial choices and the impact of their decisions. Getting a financial education not only means you are better informed, but your family will be as well as they go into their financial times.
These 7 reasons why you should get a financial education are only a few benefits to becoming financially informed. Speak with your financial advisor today on how to set up classes for getting started on financial literacy.
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