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Financial Education = Happier People

Junesoo Chang, CFP

By Junesoo Chang, CFP

Everyone agrees that personal financial stability is a necessary condition for happiness in life. Unfortunately, no one can learn how to attain financial stability in school, because formal education pays little attention to the topic. Even after graduation there is little chance to learn it readily. One of the reasons may be that achieving one’s financial goals is an on-going process that can last for an entire lifetime. It cannot be taught in one sitting.

In the introduction meeting with prospective clients, I often find that they don’t understand what financial planning is. People often think financial planning is simply “making more money.” It takes time to help clients understand that financial planning is important and necessary for them. If they knew this earlier, they would have tried financial planning for themselves or through someone else, such as a CFP professional.

Financial Planning in Schools

I think it would be desirable to have formal education teach the concept of financial planning. For example, primary school teachers could teach their students to keep a record of their spending money. That way, the students will learn how to budget their spending while they are young. In middle and high school, a higher level of financial planning concepts could be taught. Lastly, adult courses could be taught in colleges and universities. In order to persuade the education authorities, bodies of financial planners, such as Financial Planners Association Korea, need to be an active proponent for the matter.

Client Education

In many cases, I meet clients with overconfidence. They think they know everything. In reality what they know are things they hear from the news or commentaries from media, such as CNBC. Financial planners need to educate these clients first. The prospective clients need to understand topics such as risk, the difference between long term and short term investment etc. To help an individual client to achieve their financial goals, it is important to make him or her understand the true meaning of financial planning. I think if they don’t understand what financial planning is, they cannot achieve their financial goals in a true sense.

One of the goals of formal education is to make people happy. To meet this goal, curriculum should contain financial planning because financial stability is a necessary condition for personal happiness. Everyone who works in the financial planning profession must endeavor to persuade the educational authorities to do this. For an individual financial planner, it is very important to educate clients in a proper way, in order to create and maintain a good relationship with them. It is one of the main success factors of our practice.

1 comment to Financial Education = Happier People

  • While I agree with the premise of this post, I don’t think financial stability is required for happiness. There are plenty of people that are not well of, but extremely happy.

    Having said that, I completely agree that financial literacy is extremely important and under-taught in schools. Saving, budgeting, investing, these are all things that can be taught, even in their most basic senses, starting in high school, if not earlier.

    What are the practical applications for trigonometry? Few and far between. But a basic understanding of personal finances is something that applies to everyone, and can make significant differences in peoples lives.

    I also agree that most people are over-confident in their abilities. But that’s what happens when you take little to no education, and throw in Cramer on CNBC, or joe-shmo online saying you can manage your finances by reading three articles online and spending an hour a week reviewing it.

    All this being said, I think there has recently been more of a trend towards financial education. It is slow, but moving in the right direction. Hopefully, as people become more aware of the nuances of planning, they will look to others with more knowledge who are able to help them in ways they are unable to help themselves.

    Thanks again for the post!

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