Effective Decision Making in Terms of Financial Knowledge.

Having financial knowledge and a great skill for adequate decision-making makes it possible for a better helpful decision to be made, through the idea of problem-solving, thinking critically, and understanding the concepts and financial facts that surround it.

Financial knowledge and decision-making skills are essential, and they do not develop until a child begins to approach adolescent age and young adulthood, during this period of the age bracket, these skills become more relevant, especially amongst youths who desire to start earning their money, making their purchases, desire to begin to manage their bank account, or even wants to borrow for education.

Financial literacy is the cognitive understanding of appropriate financial components and skills like; investment, budgeting, taxation, borrowing, and personal financial management. When these skills are absent, it is termed financial illiteracy.

Schools can provide a basic platform for youths to practice simple financial behaviors, make sound financial decisions, and also reflect on the outcomes and possible consequences of the decisions made. The strategies I will be listing below have been thought through research to be effective in developing financial knowledge and better decision-making skills.

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• Through direct instruction: This is a straightforward, structured, and teacher-based approach whose focus will be centered around explicit skills and most likely it is usually a lecture-based system performed through demonstration or discussion.

• Competency-based learning: This approach is a student-centered learning one where students are encouraged towards a properly defined benchmark, this will provide a sense of mastery over the skill and knowledge acquired.

• Simulation: Hands-on Learning activities are used in this approach, and it is used for the promotion of critical thinking and learning applications.

• Personalized Instruction: With this approach, the needs of students are assessed, and then the instructions are tailored to individual students with strategies, resources, and the needs of each student individually.

Here are the fundamental components of financial literacy that need to be learned by every individual;

Budgeting: Four main uses for money will determine a budget, they include; investing, saving, spending, and giving away. When the right balance is created through the primary use of money, individuals are better allowed to allocate their income, resulting in financial security and prosperity.

Every individual needs to create their budget in a manner in which it is capable of paying off existing debts while some money is still reserved for beneficial investments.

For financial literacy to be intact, then lessons must be learned as regards investment. Learning about important investment components permits individuals to make very smart financial decisions that could increase income flow.