Importance of Financial Education
Money may not help you to overcome all your problems in life; though being financially educated helps one to take well informed decisions in the matters related to money and enhances ability to manage money more efficiently and effectively.
Financial literacy is the ability to effectively manage a variety of financial skills, such as personal finance management, budgeting, and investing. Financial literacy isn’t typically taught in schools, so it is often one’s responsibility to educate oneself on personal finance.
India’s literacy rate is appx 77.7 as of 2021; though financial literacy rate is just about 24% as per report by National Statistical Office (NSO)
Link – India’s Growing Financial Literacy | IBEF)
This rate could expand by more than 20% (Over current financial Literacy rate) in the next 15 years, if the youngsters within the age group 10-19 are also provided proper financial education. Financial abilities could lead to general economic growth and increase the standard of living.
SO how to improve financial literacy?
- Start Early!
Today, Gen Z and the millennials are way ahead in managing their funds, which is a positive sign. Since they are the future of our country, they possess the knowledge of saving and investing and keep enhancing it by learning about various financial aspects, including the stock market, mutual funds, digital currencies.
It is the responsibility of the parents or guardians to make their wards aware of finance since early childhood. The idea should be to create a healthy relationship between kids and money. It’s better to start early so that they can savor the fruits of the investment at their retirement. Financial education will not only provide them a bigger picture of the realities of the world, filled with uncertainties but will liberate them from the financial hassles of life.
· It’s never too late! Start reading financial materials
The term ‘financially educated’ simply means to have the right knowledge in efficiently managing and investing your money for you as well as for your family. But remember that it’s never too late to start your learning journey. Books are one of the constant companions, wisest counsellors, and the most patient teachers. They include everything, from budgeting, stocks, investing to planning your retirement, and clearing debts. There are several self-help books in the market that can ease your process of learning by educating you about the pros as well as cons of utilizing your finances smartly.
I may give my own example here—I always detested finance subject till when I was in my late 30’s.
But I could make out that without understanding personal finance I could never take concrete steps towards financial freedom.
That’s the moment I started reading various magazines (like Outlook Money) and economic times etc. to walk on the path of financial independence.
· Understand credit scores
Start by learning what a credit score is and how having good credit is a valuable tool for reaching financial goals. Then learn what kind of factors on your credit report can influence your score. From there, you will begin to understand what you need to do in order to build your own credit score.
· Update (or create) your budget and gain control over debt
There are many more ways to enhance one’s financial literacy.
One interesting point on the captioned subject is
I always meet many people saying I don’t understand finance; well answer to that point is —were you knew anything when you were borne? Then why couldn’t you make an attempt to learn personal finance knowing the benefits
Summing up
No matter what your level of financial literacy is, it is important to keep walking ahead. Taking baby steps can do wonders, provided you take that first important step.
