Why are we sent to good schools and colleges by our parents? Apart from the fact that obtaining education is one of the most essential aspects of our lives, there is another reason behind it.
We complete our education from schools and higher education from colleges and universities so that we can earn our livelihood. Once we are done with the highest degree, we usually take up jobs through which we earn money.
Essay On Financial Literacy In English
Are there any such institutions, which apart from providing us with education or giving us jobs, can also teach us about proper financial management and literacy? The answer is ‘very few!’
The capability of humans to manage money effectively by following budgets, repaying debts and making careful buying decisions is called financial literacy.
It is the art of knowing about the basic principles of financial management and applying them in our daily lives. Not many students and kids are financially literate as parents think they’re too young to be taught about personal finances.
This is a myth. The sooner you start educating your kids on money, the more financially responsible they grow up to be.
What does financial literacy comprise of?
While leading our life everyday, there are several financial steps that we need to take in order to keep track over the money that comes in and goes out. This is what financial literacy is comprised of. Few examples of such simple practices are.
- Keeping a close tab on our expenses.
- Knowing where to spend money and where not to.
- Striking a balance between the money lost and time value that you saved.
- Knowing the difference between needs and wants.
- Paying off our debts especially the high interest ones.
- Finalizing all sorts of property deals.
- Choosing the right investments to balance your portfolio.
Being aware of all such tasks related to money is a part of financial literacy. No, while it isn’t expected out of us to know the intricate details of proper money management but we should at least know how to manage our money.
Not only that, a household should be aware of handling money matters in such a way that it doesn’t have any negative impact on your and your family’s life. No one wants to lead such a reckless life that they have to end their day with no money in their pockets.
Financial Literacy – What makes it so important?
It is only through financial literacy that a person can build a thrifty budget to accurately differentiate between whatever he purchases, whatever he spends on and whatever he owes to others.
This is a subject that is of added interest to the entrepreneurs as they’re the ones who are trying hard to financially develop our country and boost the strength of the country’s economy.
When a person is financially literate, he can easily become self-sufficient and independent. Literacy empowers you with the knowledge of all kinds of financial markets, investment options and capital budgeting.
After a student completes his education from the university, he can start understanding the details of the stock and investment market. This can only be possible when the individual has been given the right financial lessons.
When you understand your finances, this eliminates the threat of facing any monetary fraud. You can spot any monetary fraud when you’re financially literate. It is difficult to accept the strategies that come from someone who has an intention of hurting the financial sentiments of others.
This is why when students have a basic knowledge of financial literacy, they can predict such risks and justify with anyone who is shady or well-informed.
Financial Literacy equips you with skills and knowledge
It is important to be financially literate as it arms you with the skills and knowledge that you require for effective money management. Unless we are financially educated, the actions and decisions that we take or those we don’t take will always have a dearth of foundation. Being financially literate can have adverse impacts like.
- Nearly most of the Americans don’t have enough resources to retire in a comfortable way.
- Credit card debt has skyrocketed like never before.
- 40-45% of the Americans can’t afford an emergency expense of $400.
Keeping in mind the above data, it is never surprising to know that nearly two-thirds of them will never even pass the test of financial literacy.
In order to explore the vitality of financial literacy, people turn to personal financial experts who work in high schools, colleges and credit union. The populations that they serve range from people of all ages, backgrounds and income.
Here are the opinions of few financial experts.
Paul Goebel – Director at University of North Texas
For students studying in college, financial literacy is vital because the formula for the success in college has 2 factors – money and grades. Instructors and professors educate students on the grade policies and academic requirements.
The future success of students depends on offering chances for them to develop, learn and strengthening the key life skills that are necessary.
Cherry Dale, Director of Virginia Credit Union
She thinks that if people understand how the financial system works while at an early stage, they steer clear of making poor financial decisions in life.
Rather they will learn how to get back in life and fix those in order to start planning for the future. Only when individuals are financially literate, they can take steps to improve their personal lives.
Dameion Lovett, Campus Director of University of South Florida
He thinks that financial literacy is vital as this is one of the most important things that will shape every aspect of a person’s life. In a family or in a marriage, most of the hardships that people will face are related to money.
We live in a system where everything revolves around money. Hence, in order to achieve stability in future, you have to be financially educated.
So, parents need to familiarize their children with money matters from a young age. They should take them to grocery stores, give them allowances and ask them to save money in a piggy bank.