Financial education offers considerable benefits for both individuals and the economy as a whole, as it helps develop the skills necessary to assess risks and consider the potential gains from a financial operation; In short, it helps to know how to balance the positive as well as the negative part of a situation and decide the steps to follow.
Financial education benefits individuals at all stages of their lives: children, making them understand the value of money and savings; to young people, preparing them for the exercise of responsible citizenship; to adults, helping them to plan crucial economic decisions such as buying a home or preparing for retirement. It also helps families to adjust their savings and investment decisions to their risk profile and their needs, which favors the confidence and stability of the financial system. Likewise, it promotes the development of new quality products and services, competition and financial innovation.
But the benefits of financial education for individuals do not just stay there. As the financial knowledge of society increases, the logical consequence will be an improvement in the performance of institutions, as there is an increasingly responsible, informed and demanding clientele. In addition, financial education helps users to require entities that meet their needs and preferences, which means that financial intermediaries have to better understand the needs of their clients, enabling a greater offer of loans and services. , and, with this, an increase in competition and innovation in the financial system.
On the other hand, if all the agents participating in an economy have a good level of financial knowledge, this will revert to a greater degree of development and efficiency of the market, thus favoring an informed behavior of all the agents and the greater contribution of liquidity to the financial markets. As revealed by international experience, individuals with a higher level of financial culture tend to save more, which usually translates into higher levels of investment and growth of the economy as a whole.
The benefits of learning financial education are:
- Better quality of life to have the ability to generate wealth.
- Smart selection of the different financings (credit), paying attention to the interest rate, commissions, etc., as well as the benefits of paying on time.
- Good health by having less stress derived from worrying about what is going to be done to cover the expenses of the month or debts.
- Realization of patrimonial goals: house, car, business, comfortable retirement, education of the children, etcetera.
- Optimal management of credit in the construction of heritage.
- Stable and prepared to face any contingency (crisis), because it has an emergency fund and income diversification.
- Better selection of financial instruments so that our investments obtain the best returns with less risk.
Some markets where there may be consumers with sub-optimal decisions are in health insurance, savings for retirement and investment decisions in general. This must be considered when evaluating public policies in countries with the level of inequality that Chile possesses. In the past few years, a number of online loan companies have appeared in Canada. For example, Kingston, Ont.-based SkyCap Financial offers loans of up to $10,000 with a quick and easy approval process. It’s true that most online personal loans are based on your credit score and income and do not require any type of security or collateral.