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“5 Financial Truths That Most Schools Fail to Teach”
After completing high school and college, we all come to realize that there are many aspects of life that schools fail to teach us. One of the most important areas that we often overlook is finance. Upon closer examination, it becomes evident that earning money and knowing how to manage it is crucial to our success and overall well-being.
Today, one of these realities is finance.
Taking a critical look, one would confirm that earning money and the ability to manage it is one of the most important areas of concern.
Research shows that only one-third of the global adult population understands finance basics.
There is no denying that the lack of financial literacy worldwide can be attributed to the absence of innate financial knowledge. Unfortunately, this kind of knowledge is rarely taught in schools. If you believe you missed out on some essential financial management lessons, I can help by outlining five crucial financial principles that schools frequently neglect to teach.
If you think you missed out on some of these teachings on financial management,
I will outline five essential financial wisdom schools failed to teach you.
Key Highlights
🎯 “Financial management is one of the most crucial aspects of modern-day living.”
🎯 “Only about one-third of the adult population worldwide has a basic understanding of finance.”
🎯 When using credit terms, some individuals may find themselves feeling overwhelmed and confused.
🎯 According to a recent study, 48% of taxpayers lack a clear understanding of how tax brackets work.
🎯 LS has been unsuccessful in imparting the fundamental concepts of investment to its students.
🎯 You can enhance your financial knowledge and skills by enrolling in online courses.
Let’s get to the details…
1. Credit Management
Credit management is the practice of managing your credit and financial status to be able to borrow money from people and financial institutions. However, even though it’s widespread, most people don’t understand how credit management works.
It is common for people to feel confused when others discuss credit terms, from credit reports to credit scores. Your credit score is the most important thing when it comes to credit management. Therefore, it is important to understand how to maintain it and what may reduce it. The higher your credit score, the better your chances of being eligible for loans and other financial services. Your credit report contains all your financial records and activities, particularly those related to loans, and how well you handle them. Additionally, it also provides a summary of your credit score based on your activities. Unfortunately, many people are unaware of their credit scores, but this can have a significant impact on your financial image. Here is a typical outline of credit scores and how they are ranked: Very Poor (300-579), Fair (580-669), Good (670-739), Very Good (740-799), Exceptional (800-850).
2. Tax Systems
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Though every adult pays taxes, most people do not understand it. People usually only start to comprehend the concept of taxes when they experience tax payment issues in adulthood. Despite being one of the most feared areas of finance, understanding taxes is essential to basic financial knowledge. However, schools have failed to teach this important financial wisdom.
According to research, over 48% of taxpayers do not know the tax bracket they fall into.
It is concerning that more than 90% of Americans are not familiar with the new tax bracket reform. Without a proper understanding of taxes, it is natural to feel skeptical about the deducted figures. Tax management is an essential aspect of life that everyone must deal with at some point. Therefore, schools should teach students about tax management early on. As part of the curriculum, students should learn about income taxes at both the federal and state levels, Medicare taxes, and other related concepts. Understanding tax percentages will help individuals calculate how much they should expect to pay in taxes from their income. If necessary, one can consider taking online courses to improve their tax management skills.
Here are some free online courses to learn tax management:
- Fundamentals of Financial Accounting (Alison)
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- Taxes and Decision Making (Indiana University via IDX)
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3. Budget Management
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Standing budgets are an essential financial tool that everyone should understand and manage.
According to Investopedia, Budgeting deals with tracking income and expenses to decide on the wisest ways to use your money.
The area of financial management involves proper planning of finances, which is often not taught in schools. One of the most common budgeting rules is the 50/30/20 rule, which suggests dividing your income into needs (50%), wants (30%), and debts/bills (20%). This budgeting method is widespread and has helped many individuals achieve their financial goals. If students were exposed to budget operations, they could develop money management skills at a young age, which would be beneficial in the long run. However, schools do not teach budget management, which is unfortunate.
One of the most common budgeting rules today is the 50/30/20 rule which depicts going for your needs (50%), then your wants (30%), and then your debts/bills (20%).
This budgeting method is widespread, and it has helped so many people to achieve more financial goals.
Exposing students to budget operations will enable them to develop money management skills at a young age, which would help significantly in the long run.
Unfortunately, this is only an imagination, as schools do not teach budget management.
4. Goal Setting
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Without goals, there would be way fewer successful people today.
According to a research survey, 14% of people who have goals are ten times more successful than those who do not have plans.
According to research, writing down goals can significantly increase the likelihood of achieving them. Only 14% of people write their goals down, but of those who do, 42% are more likely to achieve them. Additionally, the research shows that the 3% of people who write their goals down and create a plan achieve three times more than those who don’t write their goals down.
Goal setting is not limited to just financial success; it can be applied to every aspect of one’s life. It’s a vital foundation for achieving overall well-being. A good way to start utilizing goal setting is to write down all significant goals in a diary and assign flexible time frames for achieving them. Nowadays, there are many goal-setting apps available to help create to-do lists and more.
Best Goal Management Apps
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5. Investment
Investment is the singular factor behind the success of the business world. Unfortunately, schools have failed to teach students the basics of investing.
As defined by Wikipedia, Investment is the careful dedication of assets to obtain increased value over a specific period.
Assets can take different forms such as time, effort, or money. Understanding financial concepts like compounding interest calculations, stock markets, and risk evaluation can be overwhelming. There are several investment options available today, ranging from short-term certificates of deposit to high-yield savings accounts and value stock funds. Real estate is one of the most popular investment choices nowadays.
According to statistics, the total housing market in the US will hit over $30 Trillion in 2022.
Despite the real estate industry being vast and lucrative, most people still lack a complete understanding of its significant marketing concepts. This lack of knowledge is primarily due to schools not teaching about investments. However, you can change that by enrolling in some online courses.
Here are some free Investment Courses Online:
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Final Thoughts
Schools have not taught a lot of financial wisdom, as this article confirms. However, this wisdom is crucial for our daily lives, and we need to understand it. To boost your knowledge in any of the financial fields mentioned, consider taking some of the free courses available. We wish you success as you strive to improve your overall financial wisdom.