The Importance of Consumer Finance Education

Friday, November 4, 2011

Proper financial education is important for anyone who wants to have long term financial success. If more people were financially literate, there would be fewer people struggling with debt and financial stress. When a person attempts to understand the basics of personal finance, they will be building a solid foundation for their financial future.

If children aren’t taught the importance of proper personal finance decisions early, it could seriously affect them later on in life. Most children learn their financial habits from their parents, and if their parents aren’t making the best decisions, they will probably make poor decisions as well. When these children are required to learn about personal finance topics in school, they are more aware of the difference between good and bad financial practices.

Children understanding the basics
Learning the basics of personal finance doesn’t have to be difficult. Children of any age could start to learn about money management, and as they get older, they could progress to more difficult subjects (i.e. debt consolidation and student loan payments). These student should learn as many topics regarding personal finance as possible, including how to balance a checkbook, create and stick to a budget, save first and spend later, create savings, investments, and emergency funds, use a credit card responsibly, and understand credit card interest rates, fees, and all other aspects of a credit card contract. Many of these topics should be understood by the time a student graduates high school so that they are able to go off into the world and remain financially stable through college or whatever else they may do in life. However, this is not an option for many high school students, and they are forced to go to college or to start their careers without the proper financial knowledge to lead them in the right direction.

Learning later in life
If you haven’t had the best financial advice in the past, and you haven’t had access to financial education, it is not too late for you to start. Look online for reliable financial advice, or look or a personal finance class in your community. The right information is out there, and it is very easy to find if you take the time to look.

You could be trying to avoid debt, or you may have fallen behind and are in debt already. Either way, there is hope for you to get out of and/or stay out of debt. When you learn how to stay on top of your personal finance management, you can avoid falling into a debt trap, and if you are currently in debt, you can learn how to create a budget that will allow you to make your payments on time. With a successful plan, you can still pay all of your bills, feed your family, and get out of debt at the same time. When you have paid off your debt, you can then use the money that would have gone to monthly payments and put it into a savings account instead, bringing you from debt to wealth in no time.

Learning these personal finance strategies is not only important for your finances, but it is also important for your children. With the right knowledge, you can make sure your children get the proper financial advice, and you can teach them to make the right choices for their future.

How to improve a poor credit score
One of the most important aspects of your finances is your credit report. If your credit score is lower than you wish, there are many ways you can change your financial habits to improve your score. The following are three of the best things to do that will help you repair your credit and improve your score.

1. Check your credit report – If you haven’t checked your report already, you should do so now. Request a free copy of your credit report, and check it thoroughly for errors or outdated information. The data on your credit report will be used to calculate your score, and any errors in the information could reflect negatively in your credit score if they are not removed. If you do find errors, you should dispute them with the credit bureau and reporting agency as soon as possible.

2. Set reminders –Making your payments on time is one of the biggest parts of your credit score. Set a reminder for every time you have a payment due, or sign up for automatic payments. Just make sure you will have the funds to make your payments when they are due. Also, try to make more than the minimum payment on your credit card(s) if at all possible. Carrying a balance from month to month will reflect negatively on your credit report.

3. Reduce your debt – When you make payments to reduce your debt and show that you are responsible with your money, you will see an improvement in your credit score. Also, you should stop using your credit card(s) until you are able to pay off some, if not all, of your credit card debt. Try to get the balance on each card to under 30% of the card limit, and, of course, if you can get the balance down to zero, it will be better for your credit. Learn how to use your credit responsibly, and make the right decisions in the future to continue to improve your credit score.

Jen Mathis is an author who writes guest posts on the topics of business, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about credit cards for people with decent credit.

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