Why Financial Literacy Is Important


We all can agree that economy is very dynamic and complicated more than ever. And as a result, it creates a new reality that most people are not prepared for. For this reason, we need to invest in financial literacy as much as possible. To bring back our confidence and take control of our finance. In this article, you will find out; Why your knowledge deprives you of financial freedom? Why is financial literacy critical? And how to make your first steps in financial literacy.

Traditional Education Is Employees factory

Room room with student in 1968 vs. room with student in 2020.  In both cases educational system produce employees, without giving financial literacy.

What is wrong with the educational system?

Historically, the purpose of the education system was to train people for employment. It began when the Industrial Revolution occurred in the 18th century. So, most people were farmers who couldn’t read and write. So to get them qualified to work in factories, the first public schools were opened where they could learn to read, write, math, etc. It was a historic turn that the poor also could receive an education.

Over time education has been linked as a source of success. So, these who want to be successful follow the same path; Be A+ Student and get a prestigious degree. Then find a job in large corporations that offer promotion opportunities, a steady paycheck, great benefits, and pension plans. And without a doubt, this path will allow you to receive a decent paying job. But it wouldn’t guarantee financial security for the long term like it used to.

Does education is worthless?

Of course, Education is essential for the development of individuals and the creation of great specialists. But, it’s standing still while the economy changes. As a result, it doesn’t provide financial skills needed for the real world. For this reason, college graduates relying on their work as a single source of income. That is put their financial future at risk. Because these days, no one’s job is safe.

The Threats Of Employment Future

Technological advancement

Technology improved our lives beyond recognition and made the 21st century the best time for humanity. But, as said, every coin has two sides. Therefore, we need to be aware of its implications and be prepared. Since the first computer that stunned us, technology has advanced so fast in a blink of an eye. Every generation improves over the last one. As a result, the pace of progress from version to version speeds up. Robotics and AI have already progressed so fast. And compare to humans, they are much smarter, efficient, reliable, and cheaper.

“Our device isn’t meant to make employees more efficient. Its meant to completely obviate them.”

Alexandros Vardakostas – Co-founder of Momentum Machines

We are in a phase that technology doesn’t improve our performance, but aims to replace us. You will begin to notice this just by observing your local environment. And you will see that many jobs have been cut for people in favor of technology. Here a few examples:

Macdonalds, the largest food chain, has been investing in self-service kiosks in the last several years.

Walmart offers launched a self-service checkout.

Banks set up self-service kiosks for cash withdrawals, payroll services, and other financial operations. As a result, they closed their branches and reduced the human workforce.

And the list goes on. But don’t get fooled, technology is not just after jobs that don’t require a degree. The ability of AI to learn and analyze data developed very fast. It means that office-based workers and professionals will also be at risk of losing their jobs.

One thing is for sure that the accelerated growth of technology creates tough competition for people. Another key point is the whole of society is not prepared for the consequence it will bring. The predictions are that the number of jobs will shrink. And as a result, the unemployment rate will increase dramatically. As much as robots and AI will do repeatable tasks, it will cause that people will need more complicated degrees to find a job.

Globalization

Companies are always searching for ways to reduce their costs to maintain their profitability. And to provide their services for more competitive prices. So the solution for many companies like AT&T, QVC, Apple, Nike, Walmart, IBM, and etc. Is to move their manufactures and jobs from developed countries to third world countries such as Asia, the Middle East, South America and etc. In favor of cheaper labor and lowe tax.

There are controversial opinions. The first one claims the jobs which move from developed countries to third world countries, increasing the unemployment rate. And the opposite claims that it’s not harmful because new jobs created. People need to adapt and learn new skills so they could come back into the job market. But unfortunately, it will be difficult for the older generations and the low social strata to keep up with the changes. And it’s creates a reality that you have to be on your guard and be ready to adapt to any changes.

Age discrimination

When people are reaching their 40’s, they are at a bigger risk of losing their job for the following reasons:
As always, it all comes down to money. The older generation has more experience. As a result, they require higher paycheck and better benefits. Also, due to their age, the health insurance that corporations are providing is much more expensive. And life expectancy has grown so the employees required to pay costly health insurance for a longer span of years.

Employers prefer young workers because they are tech-seavy. They are much cheaper labor. And since they fresh graduates, they have the latest knowledge of their field. These days most offices, if not all of them using computers as the primary working tool. But most of the older generation is lacking technological orientation, which makes it difficult for them to fit in. As a result, employers invest resources for their training.

The government is trying to fight these discriminations with the help of laws and unions. So congress passed the law of ADEA. That protects from employment discrimination based on age. Beyond that, they established the EEOO, a federal agency. That enforces the law and put charges against employers in case of age discrimination.
Despite all efforts, the law will not protect everyone. Because companies equipped with the best lawyers who paid to find loopholes and use them. Beyond that, the legal procedures are long. And meanwhile, people are without work and low self esteem. And even if they win the trial the compensation they will get will not cover the mental and financial damage.

Occupational burnout

People spend a lot of hours at work during the day. As a result, work has a massive influence on personal life, mental and physical health. Work burnout is so common among workers worldwide. That the World Health Organization has officially classified burnout as a disease..

Here a few examples to demonstrate what causing to occupational burnout and its consequences.

  • Employees receive more responsibilities and tight deadlines then they can handle. It’s overwhelming, extremely stressful.
  • More companies are providing customer services and technical support around the clock. As a result, employees required to work longer hours and, in some cases, 24/7/365. So employees don’t have much time to rest and fill up energy. That is blurring the boundaries between work and personal life. And creating damages in personal life and leads to mental and physical illness.
  • Motivation goes down when you work with negative team members. Or when its hard to communicate with the manager. Or doesn’t back you up when it needed.

These factors causing young people to develop depression and some reach to ER due to their health issues. To protect their health, employees often take sick leave and replacing the workplace.

Financial Armagedon

Economists claim that the economy is in better shape more than ever due to the lowest employment rate in a decade and the stable wages.
Is it really that good? Let’s check it out.

According to the statistics of the U.S Bureau of labor Unemployment. The graph shows According to statistics of the U.S Bureau of labor Unemployment, since the economic crash in 2008, the market suffered a severe economic blow and as a result, slowed down. Till 2010 unemployment range was 5%-10%. But from the beginning of 2011, the economy started to recover and the unemployment rate has dropped steadily. Since April 2019, unemployment is very low and very stable. The average unemployment rate is 3.6%, which is very impressive.


source: tradingeconomics.com

United States Wages and Salaries Growth according to statistics of the U.S Bureau of labor Unemployment. The graph shows that since 2010 the salaries started to stabilize and continually grow. But since the second half of 2011, there has been a slowdown and shuffle for a very long time. That means that the salary does not grow much.


source: tradingeconomics.com

Can You Handle With Economic Changes?

When the economy is stable, people are sinking inside optimism and comfort that they tend to forget that the economy is collapsing every few years, and with it comes new reality. The COVID-19 virus perfectly illustrates how fragile our economy and life of people can change in a blink of an eye, the unemployment rate jumped from 3.5% to 14.7%, and the wages dropped once again. Therefore whether the times are good or bad, we have to be on our guard to be financially independent and prepared for the next crash.


source: tradingeconomics.com

What would you do if, for any reason, you did not have a job as a source of income or there is another economic crash? How long could you keep paying the bills and live on your savings? According to a recent report from Bankrate average American household has 8,863$ in saving. That means any changes in the economy will have an immediate effect on you.

The middle class is in danger of existence

Although the data shows that the market’s unemployment and wages are stable, the average person’s economic reality is not that optimistic. Because while living costs are continually rising, the wage range is the same since 2011. The consequence of static wages is dangerous to individuals and the economy as a whole. Already, people are struggling to pay their rent and bills. That will naturally force people to spend less, and just like the domino effect, it will affect the entire market. It can create even more devastating results and lead to another financial crisis.

Not that long ago, the middle class could afford a decent lifestyle. But now, due to the high cost of living, low wages, and the instability of the labor market middle class struggling to survive. Sadly they live in poverty, so medical care, permanent housing, a warm bed, and nutritious food became luxuries. If this continues, then it is a signal that the middle class will eventually disappear. As a result, the social and economic gap would widen, and the future would consist of poor and rich.

Your Financial Advisors Are Salespeople

“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”

Warren Buffett

Through our lives, we are giving all our savings to salespeople who claim to be financial advisors. In fact, real financial advisors are investors who created their wealth through wise investment. And usually, their service is costly, but it pays off. People are paying such a heavy price for lack of financial literacy. Because they don’t have the skills to leverage their own money. And they can’t tell the difference between a real financial expert and a salesperson.

Financial advisors will be interested in you as long as you have money. They are salespeople they don’t know how to invest. So they will tell you to save money, diversify your investments, buy a house because it’s your biggest asset, invest in the stock market when it completely rigged these days. And for sure, they don’t care if your portfolio loses money. Because they will get their commissions anyway.

“Then the people who took subway may end up riding out of Wall Street in a Rolls Royce, leaving their clients at subway station”

Warren Buffett

Financial “experts” caused the crisis of the subprime mortgage market. As a result, it led to the financial crisis of 2008. The video below explains very simply how it happened. And if it’s not enough, they will also cause the coming pension crisis. So don’t put your financial future in the hands of people who don’t care for your best interest. It’s time to make changes in your life. Take responsibility for your financial future. Start investing in your financial literacy, your mindset, and find the right teachers and mentors.

What Are The Benefits Of Financial Literacy?

“Financial literacy is an issue that should command our attention because many Americans are not adequately organizing finances for their education, healthcare, and retirement.”

Ron Lewis, former United States Representative

Confidence

All our lives, we trust that someone else will solve our financial problems. For this reason, we trust financial experts and give them our life savings. Also, we trust the government will help us in times of trouble. But financial literacy gives the courage to trust our selves. It gives skills to manage and leverage our money. And we will be able to recognize real financial experts who will serve our interests.

Skills

We have absorbed a lot of financial myths, such as:

  • Your house is your biggest asset.
  • Invest for the long term and diversify.
  • Save money and live beyond your means.
  • Get a steady job for financial security.

That is to say. These lessons are indeed irrelevant. And for sure, they won’t provide financial security. But financial literacy will allow you to thrive. Because it is giving priceless skills such as:

  • You will learn how to read your financial statement. As a result, It will allow you to follow all expenses and income. And manage your budget.
  • You will learn to distinguish between asset and liability. Thanks to that, you will be able to create cash flow instead of losing money.
  • You will learn how the market works what types of investments exist. So instead of keeping your money in the bank account, investments make your money work for you.
  • You will be able to identify opportunities to make money, whether the economy goes up or down. That is real financial freedom.

Freedom

With financial literacy, you can create financial freedom. If you love your job, you can choose to stay and work. But you will never be depend on payroll or the job market.
Beyond financial freedom, you will get back your natural right to be a free person.
Because the investment market doesn’t discriminate by gender, religion, or color. The only thing that matters is how good your financial literacy, and if you make the right decision.
You will be the masters of your time and space. As a result, you will devote your time to what is really important for you. And while your money works for you, you can travel around the world.

How Can I Improve My Financial Literacy?

Step #1 Get Technical Education

Information is the food for our minds. Our minds need to consume constantly high-quality information. So that we develop our minds, skills and make great things in our life. Before you start investing your money, first of all, educate yourself with books, seminars, and find great mentors. So that in the moment of truth, you make educated decisions instead of emotional ones.

Step #2 Get Rid Of Limiting Beilief System

Your current mindset and the belief system are the cause of your daily financial and personal struggles. Because we consumed destructive education since we were children. We have been taught to survive. So for the sake of our survival, we told to avoid something new and different, always to be on the safe shore. So we have to find a secure job with good retirement plans. Trust the government that will always take care of our needs. We have been thought that money is changing people and its source of evil. We were taught the most dangerous thing there is, to be average, to fear of making mistakes, to have “realistic” targets to avoid disappointments. These lessons are a huge barrier in our life because they guide us through everything we do daily. That made us the biggest enemy of ourselves.

Step #3 Find The Best Educators

Robert Kiyosaki is an investor, businessman, and well known as a financial educator. You will find it’s easy to connect to Robert Kiyosaki. Because his story reflects all of us. And his journey inspires and gives hope. The message is that those who want it strong enough with hard work and perseverance can succeed. In the end, Robert.K became a mentor to people around the world. He chose that mission because he predicts that a lack of financial literacy will lead to social and economic crises.

𝗥𝗶𝗰𝗵 𝗗𝗮𝗱 𝗣𝗼𝗼𝗿 𝗗𝗮𝗱 is the first book we recommend to read at the beginning of your financial education. Because it builds a solid financial foundation and guides how to create a wealthy mindset.

  • Explodes the myth that you need to earn a high income to become rich.
  • Shows parents why they can’t rely on the school system to teach their kids about money.
  • Defines once and for all an asset and a liability.
  • Teaches you what to teach your kids about money for their future financial success.

Step #4 Start Think Like Rich People

To be wealthy and successful, you need to think like one. So start to study the mindset of wealthy and successful people and the path they went through to succeed. We could not find someone else more qualified for this task than Donald J. Trump. For one thing, he has impressive achievements. Such as he is the developer of the most prestigious real estate. He is a star and producer of reality-television The Apprentice. He published educational books about entrepreneurship, real estate, the art of negotiation, and self-development. Beyond all this, he is the 45th president of the united stated.

𝗧𝗵𝗶𝗻𝗸 𝗕𝗶𝗴 𝗔𝗻𝗱 𝗞𝗶𝗰𝗸-𝗔𝘀𝘀

It’s an exciting and inspiring book. In this book, you will learn the mindset of champions, a mindset that lead’s to great success in business and personal life. Learn Trump’s secrets to thinking BIG and kicking ass! :

  • From the first chapter of the book, you will find that the lessons are practical and will serve you in every aspect of your life.
  • At the beginning of the book, you will find a quiz that will reveal if you have what it takes to be a successful investor or entrepreneur. To receive a reliable result, choose the right answer for you.
  • Donald Trump shares his challenges through his career and how he survived the bankruptcy. While others crashed so, you can learn about the mindset and resourcefulness needed to handle problems and rejections.
  • Donald Trump shares the characteristics and habits of successful people, so you can learn what you need to improve to increase your chances of success.
  • You will learn about the approach of Donald Trump towards his enemies, who tried to destroy him and his reputation.
  • You will read about Real-life stories from people who’ve applied the think BIG formula in their own lives.

and so much more…

Step #5 Find Great Educational Tools

𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝟭𝟬𝟭 demonstrates the actual conditions of the market, teaches you how to invest and acquire assets, but most importantly, how you behave within investing scenarios. Also, You can test out strategies for building wealth you might never try in real life. If you’re a saver, try aggressive investing. If you’re a risk-taker, try slow growth.

𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝟭𝟬𝟭 is unique because it makes the learning process efficient and very exciting. In addition, by playing this game you will learn financial terms, investing strategies, and develop. Skills that you can apply in the real world to escape from the rat race.

Conclusion

We rely on wages as the sole source of income. Because all we know is to work for money.
We have come down to this because we never received financial literacy. In other words, we have been trained to be employees for the rest of our lives. As a result, our financial future is in constant danger.

The problem is that work is not a stable source of income as it used to be. Because there are always factors that change the world of employment. And at the same time, the employment conditions become more difficult. And if that is not enough, the economy is fragile and absorbs a lot of crises.

Under these circumstances, it is crucial more than ever to take control of our finance. To do that, we have to invest in financial literacy. Because that is the only tool that will bring back our confidence. And would give us the knowledge and the skills to manage and leverage our money. Whether the market is down or up. In other words, it provides financial freedom.

Click here to make your first steps in financial literacy.

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