There are still many who believe that to speak about financial education is to get involved in a technical and complex world. On the contrary, financial education allows us to develop useful day-to-day skills: budgeting household expenses, identifying the cheapest credit card, protecting our assets with insurance, having a savings fund to face unforeseen events, preparing retirement.
Transmitting this knowledge is a huge challenge that requires the joint efforts of government, social organizations, and financial and educational institutions. However, the home remains the first and foremost environment in which we acquire knowledge and skills that we will use throughout our lives.
Abstract
Yet there are many who believe that talking financial literacy is to engage in a technical and complex world. On the other hand, financial education enables us to develop useful skills in every day: budget the cost of the House, identify the cheapest credit card, protect our heritage with a certain, have a savings fund to deal with unforeseen, prepare the removal.
Transmit this knowledge is a huge challenge that requires the joint efforts of the Government, social organizations and financial and educational institutions. However, home is still the first and main environment in which we acquire knowledge and skills that we will use throughout life.
Development
(Bac-Credomatic, 2008) Financial Education is the educational process through which people become aware of the importance of developing knowledge, attitudes, skills, values, habits and customs in managing the personal and family economy, through knowledge and proper use of basic tools and instruments of financial life.
It can also be defined as “the process by which financial consumers / investors improve their understanding of financial products, concepts and risks, and through objective information, instruction and / or advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed decisions, to know where to go for help, and to take other effective actions to improve your financial well-being. ”
On the other hand, the same Organization says: Financial education should be considered as a tool to promote economic growth, confidence and stability. The promotion of financial education should not be a substitute for financial regulation, which is essential to protect consumers.
The objective of the Financial Education program is to develop a culture of the use of financial instruments, which allows people, in the fulfillment of their citizenship, to be better in their personal, social and family interaction and, in the use of money, act responsibly and take advantage of opportunities for responsible credit, savings and investment and, especially, the responsibility for a decent job to produce the income that allows them to live with decorum, transparency and honesty.
Financial education serves, in this case and as previously anticipated, to contribute to the training, in the management of financial tools, of the population in general and, as mentioned above and, in particular, of those made up of young people, which in turn comprise two sub-populations: the population that studies in diversified education and the one that does not study and, therefore, is outside the classroom and perhaps part of it, involved in the country's labor force and above all in the family giving cabin to finances at home.
In the context of lifelong education or lifelong education, financial education has become important for all people and not only for those who have a high participation in the financial markets or are dedicated to tasks investment. Financial education contributes to a better quality of life, the continuous construction of knowledge, respect for values, the development of skills, abilities, attitudes and decision-making on issues that have to do with the organization of your budget, the distribution of expenses, investments in education and others, the acquisition of goods and services and the acquisition of loans; as well as ensuring a decent income when they retire and other financial issues.
Learning to Have means placing above money, life, dignity, the values and principles with which we guide ourselves.
It is recognizing that money is important and allows us to do many things, and at the same time, without money, we can also do many other things in life with which we transform the world and make it a better place to live. Learning to have means that we are able to sacrifice money for the values we have, instead of sacrificing the values we have for the money.
It is realizing that having or not having money is temporary, while having the appropriate talents, values and attitudes, we can generate wealth for ourselves and for others, at any time in life.
Learning to Have is maintaining a Win-Win attitude: It is learning that we can have money, not at the cost of other people or principles or unhappiness and suffering, but that we can have money benefiting ourselves and others.
Learning to Have means that we administer with ethics and wisdom, the resources we have received (personal, social, environmental), in such a way that we maintain them, increase them, improve them, generating development and leaving a mark.
Learning to Have implies that we live a Culture of Prosperity, with which we attract what we want, we feel in peace and harmony and we understand that many times we can be illiquid, without this meaning that we are poor, since we have the necessary resources to generate the wealth we desire.
Knowing how to have is not something we are born with, it is something we learn and can transmit and this is the importance of financially training boys and girls. In knowing that we can teach attitudes, values, economic behaviors and knowledge that allow young people to be prosperous and generate wealth with which they can transform the world.
Thus, among the main reasons for financially training children and young people, is to facilitate that they learn to have and develop attitudes of prosperity that allow them to change the culture of poverty that prevails today in our society, for a culture of prosperity.
Here it is important to note that proper financial education must promote beliefs and attitudes of prosperity.
It allows to simplify or make easier the knowledge about financial and economic aspects to make learning more effective. In this regard, it is important to highlight the need to identify the characteristics of the target population to define the contents, the learning process, the strategies, methodologies and tools that facilitate the best use of financial education.
In this case, it can be stated, for example, that the target population is the population of adolescents and people who begin the adult stage and, therefore, it is about developing financial education for adolescents and finally for adults.
Financial education should involve the target population and promote the participation of the Government, financial institutions, workers, non-governmental organizations, community groups and associations, parents, and in this sense, it will be necessary to formulate a guide on good practices or experiences and a dissemination program so that it can be strengthened and expanded, and consequently financial services.
The comprehensive approach that is proposed for financial education and the importance assigned to it, allow identifying and defining the various aspects that it comprises, among which we can mention: the conceptualization of education, freedom or financial independence; the basic elements of economics; the economy, resources and productivity; individual, family, and national economic wealth; money and finances; saving and its implications; personal and family budget; the investment; The credit; the means of payment; taxes; insurance; the financial system, banking and non-banking financial institutions; and, the protection measures.
Saving and its implications is one of the important aspects of financial education. In particular, the conceptual aspects and the importance of saving must be developed; savings and interest; how to calculate and manage interest; savings accounts and their types; how to increase savings; saving and investment; calculating the future of current savings and how to identify goals for saving.
Investment, as an instrument to increase savings, constitutes another aspect in financial education, especially its conceptual aspects, approaches, types of investment; the criteria for making an investment; and investment instruments. Also, it will be important to consider aspects related to investment institutions or companies, investment portfolios; the first steps of investing for beginners; and, why it fails and investment risks.
(Condusef) We call necessity the feeling that something is missing. We all have needs: housing, clothing, food, transportation, fun. To meet these needs, we buy goods and pay for services: food, houses, books, transportation (car, taxi, or truck that takes us to school).
Needs also involve satisfying a taste, some may be considered superfluous by many. It is important that everyone have a scale to know what they need or want based on the resources they have. For example: when we have a need to eat something, if we only want to eat turkey cakes, that need becomes a desire.
You have already seen that to facilitate the purchase of the goods and services that we need we require money, and that we can obtain that money with our work. But what is money? A long time ago, when money did not yet exist, people had to get the products they needed and did not produce. They exchanged one product for another. For example, they exchanged a hat for five avocados. We call this barter.
Money is also a means of payment, through which you can buy goods and services and pay debts. The price of a good represents its value expressed in money. If a good has a lot of value for whatever reason, I will be willing to pay a high price for it.
Money is a measure of value: it acts as the unit through which the value of all goods and services is measured and expressed. We may save some of our money for future use. Money is a commodity that we accept to exchange for other merchandise, not to consume it directly.
A budget is to write down the money we have and what we spend in a period. Budgeting allows us to know how much we have and to which we allocate each peso of our income. It also allows us to identify if we spend more than we have.
A budget not only serves to write down what we already spend, but also to identify what we should and can spend before we start shopping. It is a useful tool to organize our income and expenses.
In a budget we can write down what we want to buy in a week or in a month, to know how much money we need to cover it and set aside the money before we start spending.
Others say that it is difficult to put together a budget, since their income is not the same every month, they vary: the tips a waiter receives, what a taxi driver earns. In those cases it is when it is most important to prepare a budget, since there is no certainty of income and therefore we have to take care of what and how much we spend. It is better to assume that the income is going to be lower than it can be, so that we do not lack it.
Smart consumption has to do with reasoning our decisions before buying. You have to compare quality and price. Quality is a very important characteristic that we must take into account. For example, identify which product will last us the longest. If we need a jacket, its essential feature is that it protects us from the cold, that it suits us and we like it, not only that it is of a certain brand or that it has some image stamped on it.
Being an intelligent consumer does not always mean buying the cheapest, but rather analyzing which product or service, in relation to its price, is going to be more useful to us or last longer. The smart consumer saves on what he buys and does not overspend on services such as electricity, water, gas or the telephone.
Saving is saving a part of our income to use later. It is important to allocate some of our money to savings. We can use savings, among other things, to pay for a vacation, buy a computer, face illness or invest in a taxi. It is important to define the goals we want to achieve, so we will know how much money we have to save and in how long we can achieve it.
Making savings a habit helps us have what we want. Savings goals are different for each person and change according to age. Something that helps us save when we buy is to be smart consumers: think and compare. Saving is the habit of saving a part of our income to achieve a goal in the future or to create a fund that allows us to face an emergency. Saving implies to stop consuming a part of our income today to spend it in the future. Since the purpose of saving is to achieve a nearby goal or face an emergency, we need to have those resources available and protected. Saving is so important that as children we can open an account in the Bank for that purpose.
Many people tend to keep their savings somewhere in their home: under the mattress, in a piggy bank, or even entrust it to someone else; for example in a batch. This way of saving money is known as informal saving. Saving that way is not the most convenient, we can lose our money or risk someone taking it. A better way to save our resource is in a Bank, through a savings account.
Saving our money in a savings account has several advantages: the Bank is a financial institution specialized in managing the savings of millions of people, and there our money is protected and more secure. This more convenient way of saving is known as formal saving. In almost all savings accounts our money is available at any time, and we can withdraw it if we go to a Bank branch. When opening the account, in most cases the Bank gives us a debit card that allows us to pay at many establishments and withdraw money at ATMs.
In addition, most savings accounts have deposit insurance from the Institute for the Protection of Bank Savings (IPAB) that protects the money of savers. Ask the institution where you deposit your savings if it has one.
One way to grow our savings is through investment, which involves buying products to sell, or tools and machinery for a workshop. When we invest we seek to increase our wealth, that is, to win through a business.
We must bear in mind that investing involves risk, since we will not always make money, sometimes we can lose. Not all businesses have good sales every day. There are times when less is sold and money is lost. Our money grows when we can buy more products and services with it. Sometimes, even if we get paid more in our work, we cannot necessarily buy more. The reason is that the prices of things go up: the price of a liter of milk three years ago is not the same as it is today. The widespread and continuous increase in the prices of goods and services is known as inflation, and is generally due to the excessive issue of money or the over-indebtedness of a government to meet expenses that are above its income.
There can also be inflation when the quantity of goods that are put up for sale (supply) decreases and therefore there are fewer products for people who have money to buy it (demand). There are many products that go up in price because there is less on the market, for example some fruits and vegetables out of season.
Inflation affects our savings; that's why when we save we must look for interest above inflation, or invest in a business that makes our money grow above what prices rise.
Saving and investment are not the same, they are complementary: saving will help us meet goals, face emergencies and have resources to invest. With investment, which involves starting a business, our assets can grow as the business does well. Just as a person who wants to start running first needs to walk and gain fitness, a person who wants to invest first has to save.
Most families earn income from their work. There are those who obtain them by renting a property or working their own machinery (which represents their capital). Another source of income is the interest produced by the savings they have in the Bank.
In turn, the banks lend that money to whoever needs it and for this reason they charge interest, for example, to an entrepreneur who wants to buy new machinery to expand their production.
In the economy, everyone contributes something: companies produce what families need, and families buy it from companies with the money they receive for wages and salaries.
There are also many people who are self-employed, that is, they sell what they produce. Others are engaged in trade or transportation. All that exchange is known as an economic process.
The credit is an amount of money that we receive with the obligation to pay it in a certain period plus another amount for interest. It is a tool that allows us to acquire goods and services, some of which we could not acquire in a short time without a loan. For example: it is easier to buy a house on credit than cash, since we would have to save a lot of time to buy it in one payment. But credits can also get us in trouble if we are irresponsible with their use: if we acquire credits that we cannot pay, or if we do not pay on time, our finances will be affected and we will close the doors to obtain new credits in the future.
Before applying for a credit, we must evaluate if we can pay it. For this we need to know what part of our income we can allocate to the payment of credit, that is, our ability to pay. To know our ability to pay, we must subtract our expenses from our income, including the amounts destined to pay other debts and savings. What we have left will be the maximum amount that we can allocate to the payment of new debts without risk of defaulting on the payments.
conclusion
In conclusion, it can be said that with the knowledge previously acquired, home finances continue to be the beginning of a good financial education, the first and main environment in which we acquire knowledge and skills that we will use throughout our lives and which from a very young age. the culture of personal finance is instilled.
With this and through financial education, it also allows having a greater knowledge of financial products, concepts and risks, and developing skills and confidence to make decisions, knowing where to go for help, and to take other effective actions to improve your financial well-being; likewise, it is oriented to education, training, good habits and customs regarding the use of the instruments and basic tools of people's financial life and, therefore, of those responsible for households and by extension of community and social life.
If financial education begins at home, it is possible to be better in personal, social and family interaction and, in the use of money, to act responsibly and take advantage of opportunities for responsible credit, savings and investment, and especially responsibility. of a decent job or take on business initiatives to produce the income that allows you to live with decorum, transparency and honesty, which translates into a better quality of life.
Bibliography
- BAC-CREDOMATIC, RF (2008). Financial Education Master Book «A System to Live Better». Costa Rica: Innova Technology, SACondusef. (sf). www.condusef.gob.mx. Retrieved on May 11, 2013, from
