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A recent multi-page advertisement in the leading business daily served as a stark reminder: Personal Finance training for young adults in educational institutions are sorely lacking. Even within households, discussing money πΌπ° remains a taboo topic. But what are the consequences?
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- Over 20% of renters aged 18-24 overspend their income, according to a study by Time.
- 26% of adults admit to not paying their bills on time, as reported by the National Foundation for Credit Counseling.
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These statistics reflect more than just financial missteps. They contribute to:
- Financial Illiteracy: Lack of knowledge about managing money.
- Economic Inequality: Unequal access to financial resources.
- Predatory Financial Services: Falling victim to exploitative practices.
- Missed Opportunities: Failing to seize growth and investment prospects.
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While personal finance is heavily influenced by individual psychology, it follows a structured approach. Here are the fundamental steps:
1. Goals: Define your life objectives. Where do you want to go?
2. Net Worth: Assess what you own and what owes you. Understand your current position.
3. Cashflows Track the flow of cashβboth incoming and outgoing.
4. Risk Tolerance: Understand your risk appetite; it evolves over time.
5. Insurance: Safeguard what you’ve built.
6. Emergency Funds: Create a cushion for unexpected setbacks.
7. Debt Reduction: Strategically tackle debt where feasible.
8. Investment: Finally, consider investmentsβbut only after addressing the previous steps.
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Focus on the basics. By following these steps, you’ll pave the way toward financial stability and reach your life goals. Remember, every small action today can yield significant results tomorrow. π
What’s your take on personal finance education?
My Money Box 
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