Importance of Financial Education in Making Informed Decision on Spending: Recent Study | Chapter 2 | Emerging Issues and Development in Economics and Trade Vol. 4

The discourse of spending is important if finance is of concern. Those who save money realize the fact that wise spending leads to saving and hence investing. A household that spends unwisely can end up complaining on insufficient funds attained. Governments and organizations which spend unwisely will always cry for budget deficit. Therefore, this chapter provides a discussion on the importance of financial education (financial literacy) in making informed decision on spending. We have people in our families who always cry for insufficiency of funds. And to them they think that God has given an outright favor to some people to enjoy the lives. But we also notice that those who seem prosperous most of them are not Godly. They demonstrate a bad behavior to families, to people near them, to our kids. If their prosperity is a result of God’s blessing, we could at least realize that these people are believers.  It was from that line of thinking this study became eminent. This chapter exemplifies the use of mobile phones, food, fuels, and goodwill as among the key aspects which need to be looked at, while utilizing our money. The first part covers the introduction which reveals the definition of financial education as opposed to financial statement analyses (FSA) and or accounts information (AI). The second part reveals the importance of financial education to individuals, governments and financial institutions. The third part is the challenges for attaining financial education and examples that reveal the importance of financial education. The fourth part is the conclusion and recommendations. The chapter concludes that while income attained at any level is important, most suffrage related with insufficient income in many households is due to poor spending caused by lack of financial education. We have noted that most workers once have got a job, the first thing that one would do is ask for financial support from the bank to buy a car. Assuming that the car one has bought is at 15,000 USD, and his/her salary is 700 USD per month. The interest rate of a bank in Tanzania for instance is 19 to 20 percent. This means that you have created a grave onto yourself in the following aspects. 1) You have bought a car while your emirs work does not need you to have a car. 2)  You have created an up for and from vehicle which adds expenses to the salaries. 3) You have been asked the financial institutions to take part of the money from your very little money to its bank. What you remain with is very small amount of money. The computation will follow to mark the evidence of spending to the car for a new worker.  Hence this is a must-read book to allow the people know how to save money, when to buy a car, when and what types of vehicles you should buy while you are very junior worker, what actually you should not do while at work. 

Author (s) Details

Norman A. S. King

Department of Business and Management, Faculty of Business and Economics, University of Iringa, Tanzania.

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