Financial literacy refers to the awareness of how funds should be spent and how it can be utilized in a manner that would make an individual more financially stable in the future. Learning financial literacy proves fruitful to everybody in society, especially when the economy is rapidly declining. Fundamentally, financial literacy is critically important in the contemporary world because money is a scarce resource which ought to be effectively managed. Numerous institutions across the world have been established to help the large population that require financial knowledge to study in a conducive environment. Just like any other person, military men and women should also be equipped with the necessary financial skills to help them manage their money in a rational manner. The paper seeks to exhaustively discuss the significance of teaching financial literacy in the military.
Financial literacy helps the military members to increase their credit store (Hastings, 2013). Many money lending institutions target the members in the military to secure loans, and as such, they fall prey to them. Without the necessary financial knowledge, these military members secure the loans and waste them by engaging in non-profitable activities. Increased credit store could only be realized when service members know when to seek for loans and how to effectively use the acquired loans to reap maximum benefit. Financial literacy for military helps them to build their credit score, which they might use it future to seek crucial loans for his or her financial development. Financial literacy is important to the military because it assists them in establishing the anticipated loan interests before actually taking it. The move helps the military members to increase their credit store because when he or she is aware of the interest on the loans, will enable him or her to repay the loan as required by the money lending institutions. Lack of financial literacy might adversely affect the credit score of the military members since they will end up taking loans without a noble idea of investment and as such, they squander the funds and fail to repay (Ross et al., 2017). Defaulting a loan renders the servicemen and women ineligible for future loans since their credit store is exponentially reduced. Nonetheless, a military member will avoid bad debts when he or she is equipped with good financial literacy since he or she will understand his or her net salary and how it should be distributed effectively to serve the many unsatisfying wants.
Delegate your assignment to our experts and they will do the rest.
Financial literacy helps members of the military in creating a post-military budget (Wagner, 2015). Military men and women are aware that at a particular time, they will retire from the military and without appropriate financial, they may suffer financial constraints despite having a lot of money in his or her disposal. The financial literacy is important because it will help retired military members to make a good post-military budget. Arguably, there are many utility bills that need to be serviced by an ordinary person, and military members are no exception. For instance, a retired military member will have to pay rent if he or she has not set up a house, loans to service, healthcare insurance, food budget, and education of his or her children. A military member inevitably needs financial literacy to help him do the post-military budget aforementioned. Ideally, a military member with adequate financial literacy tends to be more organized than the one without any financial skill. Financial knowledge is essential for military members because it will assist them in creating a budget based on the most basic wants Aprea et al., 2016). The financial skill also helps the military men and women to identify the budget deficit in advance and make the necessary adjustments to avoid financial constraints. For an individual to effectively manage his or her funds, he should comprehend how to make a good budget which is learnt in financial literacy training. Financial literacy is important to military members because it helps him or her to monitor the nature of spending as well as income flow from salaries and investments.
Moreover, financial literacy is important to the military since it helps them identify the best and profitable investments (Participating, 2015). Proper financial literacy of military assists to make an informed and well-thought decision before entering any type of investment. The financial literacy is key to investment because a person understands the basic financial concepts and how to utilize the same to make good investment decisions. Military members should, therefore, acquire the financial skills to be conversant with numerous financial ideas that would help him or her in making a viable investment decision. The choice of the type of investment is overly guided by the knowledge an individual has in the financial field. Without basic financial knowledge, military members might end up in the wrong and unprofitable investments, which might plunge him or her into financial constraints. Creating income streams as well as investing in stocks are important skills learned in financial literacy course (Henager, 2017). Military members should have these financial skills to broaden their mind and understand that they should not solely rely on salaries but on many profitable investments. Financial literacy on members of the military helps them to survive during financial crises because they rely on numerous sources of income apart from salary.
Nevertheless, financial literacy is critically important to military members because it helps them save fund for future use (Te’eni-Harari, 2016). Financially smart military members pay their daily bills, and the remaining funds save them instead of using them for luxury and entertainment. People with good financial skills think of saving more money for future use before visiting entertainment joints. Research shows that military men and women without financial literacy tend to suffer financial stress in life because they lack the knowledge of financial management. Ideally, saving is an indispensable part of financial wellness which helps a person to secure present as well as a happy future. Financial literacy is also important because it makes military members save to achieve important accomplishments in life. Saving assist military members in paying school fees for their children without stress and financial constraints, thus enjoying retirement. Financial literacy helps members of the military to understand that they can save through interest yielding financial institutions, thus growing his or her financial muscles.
Financial literacy in military grants them an opportunity to understand financial concepts and the best money lending institution to avoid being duped (Koh, 2016). The influx of many lending institutions in the banking industry is a threat to many members of the military who want to request loans. Since financial literacy refers to the appropriate use of money, servicemen and women will be able to identify the best money lending institution with cheap loan interests. The idea will enable military members to avoid falling in the hands of banks that charge high interests on loans. Lack of financial literacy will plunge military members into banks that charge exorbitant interests on loans hence reducing their financial muscles which may eventually end into bad debts, thus adversely affecting their credit score. Money lending institutions such as banks and saving and credit companies (SACCOs) offer loans at different interest rates, and therefore it is important for members of the military to understand basic financial literacy. Proper skills in financial literacy will assist military members in seeking a financial expert for guidance on which lending institution should seek a loan from.
In the contemporary world economy, people should strive to be financially literate to cope up with financial constraints that have characterized the market. For military members, financial literacy has helped them to increase their credit score, understand the financial concepts and money lending institutions that offer cheap interest loans, to save funds for future use, and help them to identify the best and profitable investments to increase their monthly income. Financial literacy among the military is instrumental in helping them to create a budget in their families and increasing their credit score to be eligible for future loans. Generally, nation-states should provide financial literacy training in military camps to equip officer with appropriate financial skills to help them survive during the financial crisis. They should be prepared on how to budget for their monies to avoid bad debts that might lead to mental depression while still serving the country. Mentally disturbed military personnel will not provide services as required by law. More importantly, military men and women will be able to effectively utilize the funds allocated by the government to run its operations only if they have good financial literacy skills.
References
Aprea, C., Wuttke, E., Breuer, K., Koh, N. K., Davies, P., Greimel-Fuhrmann, B., & Lopus, J. S. (2016). Financial literacy in the twenty-first century: An introduction to the international handbook of financial literacy. In International handbook of financial literacy (pp. 1-4). Springer, Singapore.
Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial literacy, financial education, and economic outcomes. Annu. Rev. Econ. , 5 (1), 347-373.
Henager, R. (2017). Financial Behaviors of Military Households: The Role of Financial Literacy and Financial Education. Consumer Interests Annual , 63 .
Koh, N. K. (2016). Approaches to teaching financial literacy: Evidence-based practices in Singapore schools. In International Handbook of Financial Literacy (pp. 499-513). Springer, Singapore.
Participating, F. L. E. C. (2015). Financial Literacy and Education Commission Public Meeting February 25, 2015, 9: 00 am-11: 30 am US Department of the Treasury–Cash Room (Doctoral dissertation, Office of the Comptroller of the Currency).
Ross, D. B., O’neal, C. W., Arnold, A. L., & Mancini, J. A. (2017). Money matters in marriage: Financial concerns, warmth, and hostility among military couples. Journal of Family and Economic Issues , 38 (4), 572-581.
Te’eni-Harari, T. (2016). Financial literacy among children: the role of involvement in saving money. Young Consumers .
Wagner, J. (2015). An analysis of the effects of financial education on financial literacy and financial behaviours.
