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Why A Financial Education Is Crucial

By Charles Hopkins Published 09/19/2006 | Entrepreneur

When talking about the need for a financial education we are not speaking of going to a university to study finance, nor are we talking about how much mathematics someone has learned in school. A financial education means being able to understand what you are doing with your money, how to invest it if thats what you want to do and being able to make the most of the money you earn. In this day and age, it is so much more important to know what you want to do with your money and how to do. Things cost more, there are more choices to make on what you can buy and you want to be sure not to live beyond your means.

The first thing to learn is how to budget your money. This may sound simple but if you cant set up a budget and try to live by it then potentially you could have terrible problems. Not that you have to stick to it compulsively, but its always a good idea to make sure that you are not spending more then you have coming in. Besides, a budget is a good financial exercise. Once you have completed your budget you will be able to see what you have over to save or invest. As you are never too young to begin to put money away for your future, this exercise in budgeting is very helpful in showing you what you can do to ensure a better future.

Before you decide to invest, other then in savings accounts, talk to investment councilors. They will teach you a few things that will help you to decide how best to invest your money. But be careful, because they will want to sell you their services and this may influence some of their suggestions. Dont let your financial education be limited to just those who work in the financial field. Talk to friends or family who you know have invested their money in various ways. Get first hand information so you can see what has worked for others and what has not. That is really the best financial education you can get. Never be reluctant to talk to your parents. They wont think you are trying to discover how much money they have and will likely be flattered if you come to them for advice.  Over the years, they worked hard and may just have some pointers that will help you with your money management and investment quandaries.

Whichever path you may follow in dealing with your saving and investing issues, knowing as much as possible before making your decisions is crucial to your financial happiness. Search the internet for some of your answers. If you want to invest in stocks, research the company and its history thoroughly. If it is GIC's you are thinking about, make sure you compare interest rates. Even savings accounts will offer different packages with different rates and service charges. The more you know, the better you can make those tough financial decisions.