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LACK OF FINANCIAL EDUCATION AMONG YOUNGER GENERATIONS SPARKS CONCERNS OVER FINANCIAL LITERACY

Empowering Young Adults Through Financial Education for a Secure Future

30.04.2024
BY MAXWELL SOETOMO
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In today's fast-paced world, financial literacy remains a crucial aspect of navigating the complexities of modern life. However, a concerning trend has emerged where many young individuals lack basic financial education, leading to difficulties in managing money, applying for credit, and avoiding debt traps.

Quoting Investopedia (September 13, 2023), it's evident that the younger generation still faces a significant knowledge gap when it comes to understanding financial management, credit applications, and debt avoidance – essential skills for securing a stable financial future.

Addressing this financial challenge, young adults should grasp financial strategies through self-education and careful selection of financial partners. Here are some key financial tips for securing a sound financial future:

  • Pay with Cash, Not Credit: Cultivate patience and self-control by using cash or debit cards for purchases. Avoid relying excessively on credit cards, as they can accumulate interest unless balances are paid in full each month. While credit cards can help build good credit, they should be used sparingly and primarily for emergencies.
  • Educate Yourself: Take control of your financial future by educating yourself. Read basic books on personal finance to gain essential knowledge. Be cautious of influences that may lead you astray financially, whether it's influential individuals promoting lavish spending or friends planning expensive outings. Seek advice from trusted professionals such as financial planners, mortgage lenders, or accountants before engaging their services.
  • Budgeting: After acquiring basic financial knowledge, understand the two fundamental rules of financial tips: never spend more than you earn and keep track of where your money goes. Budgeting and creating a personal spending plan help monitor income and expenses. Small changes in daily spending can have a significant impact on financial stability. Keeping monthly expenses, such as rent, as low as possible can save money over time and position you for sound investments.
  • Establish an Emergency Fund: Start saving for emergencies and future expenses. This simple practice can prevent financial hardships.
  • Save for Retirement: Regardless of age, start planning for retirement now. With the power of compound interest, starting to save in your twenties can yield substantial returns over time, providing a secure retirement fund for the future.
  • Monitor Taxes: When considering a job offer, calculate whether the post-tax salary meets your financial needs and savings goals. Online calculators can help determine net pay, allowing you to make informed decisions.
  • Prioritize Health: If you lack health insurance, don't delay in obtaining coverage. Many employers offer health insurance packages with substantial discounts, making it easier to qualify for health savings accounts.
  • Wealth Protection: To safeguard your hard-earned money, seek assistance from fee-based financial planners who provide unbiased advice in your best interest, rather than commission-based advisors who profit from enrolling you in company-backed investments.

In conclusion, addressing the lack of financial education among young adults is critical for fostering a financially literate society. By implementing these financial tips and continuously seeking knowledge, individuals can secure their financial well-being and build a stable future.

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