Money management isn’t an innate skill; rather, it’s something that must be taught and learned over time. The first step is understanding the value of money. Once that is established, people can then learn how to best manage it. That’s where financial literacy comes in.
While it’s never too late to learn how to be financially literate, it’s a major advantage if teenagers and young adults already have those skills before they join the workforce. That way, from their first paycheck, they know how to properly save and spend their money, and from there they develop good financial habits before adulthood. This sets them up for success once it’s time to start budgeting, saving, taking on debt, and managing credit.
With money being the biggest source of stress in people’s lives, having the skills to successfully manage finances can also reduce one’s physical and mental stress levels. Life throws us many curveballs, but having the ability to foul off those curveballs—if not hit them out of the park—gives people the tools to handle financial issues and even prevent them from happening in the first place. For example, if you know to put aside money from each paycheck into a savings account, an unexpected repair bill or medical expense is much easier to deal with. If you have a child and immediately start setting aside some money for college—and keep building upon it each year—the sticker shock of a four-year college education won’t be quite as jarring.
Perhaps most importantly, being financially literate can make post-work life much more pleasurable. By knowing how to save for retirement, one can live comfortably in their golden years—and perhaps even get a head start on retirement.