Why Financial Education Matters

Morgan Housel once said, "Financial education relies more on psychology than money," and he’s absolutely right. Most of our money decisions are driven by emotions, with fear and greed being two of the biggest influences.

If we agree that nearly everything in life involves money, it becomes clear that we’re constantly making financial decisions. But without the right knowledge and skills, managing money becomes incredibly difficult—especially when emotions are in control.

Imagine earning a large sum of money from an inheritance, or career breakthrough. Without financial education, you might impulsively spend it on luxury items like an expensive car, designer clothes, or gadgets you don’t truly need. At first, it feels exciting, like a reward for your hard work. But over time, the money runs out, leaving you struggling to maintain the lifestyle you’ve created. Worse, you may turn to borrowing, accumulating debt, and falling into financial trouble.

This isn’t uncommon. Many professional athletes and celebrities earn millions but end up bankrupt because they lack financial education. They spend on extravagant homes and luxuries without planning for taxes, savings, or retirement, leaving themselves vulnerable when their income decreases.

The same principle applies to anyone. People often spend raises, bonuses, or windfalls on non-essentials, later regretting it when emergencies arise and they have no savings to fall back on.

Without the skills to set financial goals, and budget, to understand how much money is needed to live comfortably, it’s easy to misuse resources. Instead of building security, many fall into the trap of “keeping up with the Joneses.”  

This cycle is reinforced by societal competition and the instant gratification promoted by social media. However, the key is to recognize this pattern, take control, and start making intentional changes.

Financial education helps us manage money wisely, regardless of how much we earn. By learning to earn, save, invest, spend responsibly, protect wealth, and avoid unnecessary debt, we can use money as a tool to build a secure and fulfilling life—free from stress and regret.

Moreover, financial education isn't just about numbers and budgets. It’s also about learning how to align our money with our values, ensuring it serves us in creating a meaningful and joyful life.

In a society where success and happiness are often measured by material possessions, understanding how to manage money wisely is more important than ever. Financial education empowers us to use our resources smarter and to prioritize what truly adds value to our lives.

When we manage our finances effectively, we can:

1. Avoid Debt: Living within our means and avoiding unnecessary debt brings us freedom and peace of mind.

2. Cover Our Needs: Ensuring our basic needs are met allows us to live with dignity and security.

3. Build an Emergency Fund: Having a safety net creates a sense of stability, helping us handle life’s unexpected challenges with confidence.

Once these essentials are covered, we can focus on what truly brings joy. Research shows that spending money on meaningful experiences, rather than accumulating material possessions, leads to greater happiness. Experiences create memories, strengthen relationships, and enrich our lives in ways that tangible goods cannot.

Additionally, using our resources to help others in need—without expecting anything in return—fosters a deep sense of fulfillment and connection. Generosity has the power to transform not just the lives of those we help, but our own lives as well.

That’s why financial education is so important—it equips us with the tools to make smart financial decisions, avoid common mistakes, and live with intention and joy.