Over one million American students drop out of school every year – but is this a problem?
Apparently so. Recent research found that college dropouts are not eligible for 90% of new jobs, and they tend to earn half as much as college graduates when they do find employment. This shows that there is a clear link between education and financial success – but for many people, the cost and time to obtain a degree are a significant factor in their decision to avoid further education.
Here is why education is important for financial success, especially when it comes to financial education.
How Education Can Help to Boost Finances
There are lots of people who have succeeded financially without a great education, so it is entirely possible for people to succeed without an education – but it will be more difficult. The higher level of education that you receive, the higher amount of money you are likely to earn. This is true for many professions, but let’s use the medical professional as an example;
If someone gets a medical job without a college degree, they will earn between $20,000 and $40,000 on average annually, and they will struggle to move up the ranks as they won’t have the relevant qualifications for many of the jobs. On the other hand, someone who progresses to working as a physician (a job that requires a medical doctorate) will earn between $120,000 and $500,000 on average annually. This shows the power of education, which is why many entrepreneurs such as Jason Sugarman choose to invest millions in improving education in the US for children and teens.
The Importance of Financial Literacy
Financial literacy is more critical today than ever before. This is because in the past people mostly used cash for their daily purchases (such as their weekly food shop), but now the majority of people use credit or debit cards to pay for their purchases – especially younger shoppers.
The way that people shop has also changed. Online shopping is more popular than ever, and lots of people pay for items on finance, which means that there is more potential for people to extend their credit and end up in debt.
Another problem is the number of banks and lenders who are willing to continue extending the credit of people with bad finances. In the past payday lenders didn’t even exist, so people with poor finances weren’t able to take out high-interest loans. This makes it even easier for people end up in financial trouble, so it is important to make sure that young people are taught financial literacy to reduce the chances of future debt.
The Future For Financially Literate People
People who are financially literate are more likely to be good at saving, meaning that they are more likely to save up adequate retirement funds; in fact, they are likely to have double the wealth of people who do not plan properly for retirement. They are also less likely to end up in debt or bankrupt, so they are less likely to rely on credit.
This shows the vast, life-changing benefits of being financially literate. Understanding budgeting, saving, credit and interest rates can make a vast difference to the quality of life, so it is important to ensure that everyone is clued up about their finances. It is also very important to make sure that the next generation is financially literate, as the current financial climate makes it easy for people to end up in debt.
Is It an Individual Problem?
Lots of people see financial literacy as an individual problem, but in reality, the problem is broader than it seems. Various studies have found that a lack of financial education in the US influenced the financial crisis of 2008, which impacted the entire US economy. This shows that it is essential to highlight the importance of financial literacy, this will have a positive impact on economic health in the US – as well as improving people’s finances.
Benefits of Financial Education
Financial education is also a big factor in financial success. If a child is never taught about the value of budgeting and saving, it is more likely that they will encounter debt problems later in life, which is why many states are now adding personal finance to their curriculum requirements. Now 39 of the states have personal finance on their curriculum, which could help to significantly improve the rates of financial success in America for the next generation.
Education is inherently linked to financial success for most people. While it is possible to be financially successful without a good education, it will be harder for you to succeed as there are fewer career opportunities for you – and a lack of information about finance could increase your chances of ending up in debt.