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Six Reasons Financial Literacy Month is So Important

While the worst of COVID may seem like a distant memory, the long-term economic effects are far from over. The pandemic was detrimental to many small businesses, but it disproportionately impacted those owned by minorities. According to a National Bureau of Economic Research study, active business owners decreased by 41% for Black-owned enterprises, 32% for Latinx-owned companies and 26% for Asian-owned businesses compared with 17% for white-owned companies. Much of this is attributed to a need for more financial resources and increased access to capital. Because entrepreneurship provides one of the best opportunities for building generational wealth, financial knowledge and access to supportive resources are crucial for all small business owners.

As April is Financial Literacy Month, it's an excellent time for business owners to increase their financial understanding and awareness of tools that can help them handle both growth and unforeseen circumstances like an economic downturn. The National Bankers Association Foundation is the non-profit arm of the National Bankers Association devoted to helping individuals and small businesses achieve economic well-being. In this blog, we discuss why financial literacy month is essential not only for individuals but for entrepreneurs as well. 1. Knowledge is Power: Financial literacy empowers individuals and businesses by giving them the knowledge and skills to budget, save, invest, and manage debt effectively. People with this knowledge can make informed decisions that help them achieve their financial goals and improve their long-term financial security. 2. The Sooner, the Better: This month also enables schools and parents to teach children about money management early, which means they are more likely to understand the value of money, the importance of saving, the benefits of entrepreneurship, and how to avoid debt. 3. Reduces Stress: Financial stress is a significant problem for many people. It can lead to anxiety, depression, and other health problems. Financial knowledge can significantly reduce stress by giving individuals the tools to manage their money and have more control over their future. 4. Helps Prevent Financial Mistakes: Financial mistakes like missing payments can be costly and have long-term consequences like poor credit, which often leads to paying higher interest rates. Education can help individuals and businesses avoid these mistakes by giving them the knowledge they need to make informed decisions. 5. Improves Long-Term Decision-Making: With the proper framework, individuals and business owners can be better equipped to make smarter decisions, understand the pros and cons of different financial products, assess risk, learn how to raise capital, and develop long-term financial goals to help them deal with unforeseen circumstances. 6. Benefits society: Economic well-being reduces stress and improves decision-making leading to increased stability, reduced debt, and increased economic growth. Financially stable business owners are likelier to make new investments, grow businesses, contribute to the economy, and build generational wealth. In conclusion, financial literacy month is crucial because it empowers business owners, reduces their financial stress, helps them avoid financial mistakes, improves their long-term decision-making, and benefits society. And while Financial Literacy Month is a great time to get started, there are many available resources to empower businesses all year round. To learn more about how the National Bankers Association Foundation efforts to support financial literacy, click here.

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