Why Financial Literacy Is Important?

When it comes to financial literacy or financial topics , we will switch channel if the discussion is on TV or we will move out of the group , if the discussion is among our friends . It is hard to find the reason for repulsion in attitude towards financial literacy by the common people. I think our school curriculum has a genuine role in making the people financially illiterate. They teach students all extracurricular actives except helping them to learn how to  manage money or make a financial port folio. What I am talking is just about seeding the  basic financial concepts at least  at the higher secondary level, so that they won’t be blind about the financial management aspects.

Do our society want everyone to be financially literate? Let’s take a look on some of the answers:

Banker: “No, if everyone knows the power of compounding, then no one will be falling in the trap of EMI’s and loans easily”

Credit Card companies: “No, if customers learn the  proper way of using the credit cards, they will be enjoying the discounts, airport launch access etc. without paying a penny to us. The fine on the mistakes done by the financially illiterate people is our most significant income”

Insurance Agent: “No, never. The moment the customer understands that endowment  insurance polices are not an investment , we will lose our policies”

Mutual fund/Stock advisers: “No, if everyone starts learning the market, there won’t be any existence for us. No one will pay us for the logical suggestion made just by analyzing the market.”

Social media influencers: “No, if everyone knows the potential of affiliate marketing, it will be hard for us to sell products by acting like helping followers to choose the right products”

The answers may be hard to digest but , you have to admit the truth. For most of us , financial literacy is following the sales dates in the online shopping sites and savings made by buying offer products will be their  financial victory. It is always wise to buy quality products in a cheaper price, but don’t restrict your financial knowledge by just chasing the discounts alone.

Still now, we talked about the society and culture that kept us away from financial literacy. Lets examine our self about our commitment towards money management and investments . If I am not wrong, everyone would have learned about simple interest and compound interest in our school days. Are we really using the power of compounding , while we deal with our savings and investments?

Whenever a sales person related to financial instrument approaches us , we tend to step back just thinking it will be a trap. Do you think all the financial instruments are traps or scams? We are afraid , just because we don’t understand what they say or we don’t know how  to analyze their inputs properly. The easiest way of  analyzing an investment opportunity is by comparing  interest that can be received by the compound interest and the returns of investment for the same amount for a fixed period . There are lot of online calculators which help you to calculate the compound interest for different permutations and combinations. Always say no to a investment opportunity that, gives you return less than a 8% (average fixed deposit interest) compound interest  deposit can give.

We all are trying to settle in life by working for money . The hidden truth is that, no one  is going to be settled unless money starts working for them . We have seen people working for years and all of a sudden once he/she losses the job, they feel the financial insecurity within few months. Now a days , the job security is decreasing and so we should have a proper financial planning that can at least  give us a breathing time of 6 months even without any job in tough time.

Nowhere in the world , the financial management is taught in the schools, that doesn’t mean it is not important . It is just a reflection of group people that want their society to be financially illiterate . If you are a person who is concern about your financial future, just start spending time in learning and creating a proper financial port folio for yourself.

Keep these two golden rules when you invest,”be focused and be  patient” & “Never invest on something you don’t understand”. Wish you all a secure financial future.

Please follow and like us:

About the author

Alvin Valantine

Alvin Valantine

Hi, I am an online blogger who loves to explore different perspectives of life, in this fast moving online world. This blog site is dedicated to all folks who wants to update the current trends in the most simple words.

View all posts

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *