Importance of Financial Literacy

Financial literacy is the ability to make effective and informed money management decisions using the financial knowledge and skills. Developing financial skills to become financially literate is a long process which begins with something as simple as putting a little money in a Piggy Bank. The skill of money management evolves gradually according to the income, expenditure, loans, and asset allocation.

Money is the least talked about topic in a family; however, the base of any family is never complete without financial stability. Parents usually avoid talking about money with their kids, but the need of the hour is that we talk to our young ones about finance and make sure that they know how to handle the financial challenges and temptations. A teenager with some financial knowledge is more likely not to end up with regrets in the future.

Don’t you ever wish that it would have been fabulous if you could get the needed head start when you were young? So, why not make our young generation financially literate?

As financial literacy is not emphasized in our current education system- most of the students lack the necessary knowledge and skills to become financially responsible adults. Schools can really play a vital role here by incorporating financial education in the syllabus.

Here’s why schools should promote financial literacy:

1.    They don’t know enough

Most of the young people have little knowledge of finance and economics. They spend and borrow without knowing that money doesn’t grow on trees.

2.    There are greater temptations

The Internet has made it really easy to buy nearly anything online and when young ones are old enough to buy online, it becomes more important than ever to inculcate the habit of saving in them.

3.    They have more debt

It becomes a habit to spend lavishly until and unless starts earning and value the hard earned money. Often, it gets too late in realizing the value of money later on and they are already in debt. If a financial literacy program is implemented in schools and colleges, they could graduate with less debt.

4.    People are going bankrupt younger

According to a survey, almost every one in five Americans from age 18 to 24 declared bankruptcy. India is developing rapidly, probably faster than any other country and the USA sets a perfect example for us to fear the coming danger. 

5.    They start saving later

Today, it’s not uncommon for a student to start a stable career in their 30’s. Financial literacy can really help developing the habit of saving and investing during their school, it will encourage youth to get started earlier and avoid getting into trouble in the future.

6.    The government won’t always have their backs

It is highly likely that the next generation of retirees won’t cherish the same benefits as their parents are enjoying now. So, young people today need to save more and invest wisely if they want a comfortable retirement later.

India is known to have the most number of young people in the whole world right now. This simply means our future lies in the hands of our current generation largely. Financial literacy improves their personal financial decisions. It helps to make a choice about many of the critical issues confronting our nation and teach students the economic principles that will help them as a citizen. 

Despite this recognition, most money things are still not taught. The role of financial educator falls primarily on parents, guardians and teachers in the schools. Parents try to avoid conversations about money because they are unsure of where to begin and worried about saying the wrong thing. Even if the adults are not financial rock stars themselves, it is important for adults to remember that they have experience and perspective on their sides. It needs an effort right now from parents and teachers to secure the prosperous future of the coming generation.

For more information log on to http://indusleap.com/finwin/

Source: Allafrica.com