Learning to manage money is one of the key aspects of adult life. How in your view can individuals best learn to manage their money?
Learning to manage money is something that virtually everyone must do as the ability to maintain a balance between income and expenditure is essential for a stable life. In many developed countries, the availability of easy credit and a wide variety of products have made the task of managing one’s money more complex. In less affluent parts of the world, lack of money or access to credit creates its own challenges. In this essay, I will outline two ways in which people can learn to manage their money.
Learning by example is one important method. From their early years, children can observe how their parents make financial decisions. They may notice, for example, whether money is saved for costly purchases, or whether purchases are bought on credit. Children can also see what kinds of criteria parents use when choosing what to buy, for instance, whether quality or quantity is more important. It is important, therefore, that parents model sensible purchasing behaviour and explain what they are doing and why. However, in many circumstances, this may not be sufficient.
Another important means of teaching people to manage money is through education. When school children, for instance, learn arithmetic, they could also be taught the basics of budgeting and how to recognise good value. For adults, the Internet could be a good source of advice on how to save money. Price comparison websites, for example, can be a good way of researching what is available before making an expensive purchase.
The ability to manage money is often taken for granted. Because the consequences of poor money management can be severe, it is worthwhile taking steps to ensure people are as well-informed as possible.