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Did you know that seven out of ten Puerto Ricans have no idea how to budget, save, manage debt or invest? According to a recent study, total consumer debt in Puerto Rico reached its highest level in a decade, at nearly $30 billion. And people are increasingly using credit cards to pay for everyday necessities such as food, gas and even rent. Why is this happening? There are several reasons. The COVID-19 pandemic, inflation is skyrocketing, and the cost of living is getting higher and higher in a country where the median household income has remained at about $24,000 for 6 years now. As a result, the country's families' ability to pay has been put to the test, pushing them to resort to credit to cover their basic needs.s.
By understanding basic concepts such as budgeting, saving, debt management and investing, people can develop responsible financial habits that allow them to achieve their goals and avoid falling into the default trap. The problem, however, is that many do not know where to start.
Many people who do not have a formal financial education resort to receiving advice from family and friends, who usually do not have adequate knowledge either. In this way, the actions of making impulsive decisions related to money, indebtedness and mismanagement of income are reproduced.
It is crucial to design and implement financial education strategies specific to one's needs. Personal finance professionals, not to be confused with other experts in the financial field such as accountants, insurance agents or bank officers, are like coaches who teach you how to use your money to achieve your goals. They help you budget, save, invest and avoid debt. One of the things that this type of professional usually recommends is the elaboration of a financial plan, which includes the construction of a monthly budget that will allow you to analyze your financial health and identify how you can improve it. Another thing to understand is that it does not happen overnight; achieving financial well-being takes time. In general, according to experts in the field, it takes seven years, but it may take a little more or a little less.
"That sounds perfect. But, if I can't pay off the card, what makes you think I can afford to pay a personal finance professional to help me?"
The good thing is that through the use of the internet, people interested in getting literature and educational content about financial wellness can do so, for free, by accessing platforms such as:
- The Financial Education Institute of Puerto Rico
Its purpose is to to develop educational initiatives to foster the growth of a better country. better financially educated country. For this reason, it carries out strategies aimed at impacting various sectors of the Puerto Rican community. Such as: lectures, training and massive orientation activities.
The contact number is (787)723-3131 Ext. 2218.
2. The Consumer Financial Protection Bureau
The latter website features consumer guides and checklists to, for example, measure the user's financial well-being.
Similarly, there are a variety of free mobile applications that are useful for recording how much money is used on a daily basis, making it possible to have greater control and awareness of consumption habits.
In short, mastering the financial language is as important as learning to walk. That is why we should not maintain the taboo that learning about money is a luxury only for the rich and entrepreneurs, because then, do the rest of the people deserve to feel that they will be condemned to be "pelaos" for the rest of their lives? Therefore, just as every human being must learn to walk/transport from one place to another, so must every human being learn about financial literacy. Every person who learns about financial education will not only help people stop falling behind in their payments and have better financial health, but will also help the economic development of the country.
When people know how to manage their money, they are more likely to save, invest and even become entrepreneurs, which in turn drives economic growth and creates more jobs. The increase in delinquency (people who do not pay their debts on time) in Puerto Rico is a call to action to strengthen financial education, especially for the middle and lower classes. Implementing effective and accessible financial education strategies is crucial for people to make responsible financial decisions, improve their economic situation and contribute to the sustainable development of the island.
Education is the most powerful weapon you can use to change the world.