6 Solutions for Lack of Financial Education
We live in a globalized world where we everyday encounter consumerism i.e. attraction for material things such as latest gadgets, jewelry, and other consumption things that we ultimately end up buying. And one of the reason is lack of financial education; which is actually the backbone of any country. This problem is affecting not just one country but worldwide.
Practically speaking, financial education is the weapon to fight against consumerism and low economic level.
The problem lies with the education system. Very few countries impart studies in financial systems or personal finance at a young age. This is one of the reason why people are under educated in the world of finance; since financial education is not made necessary. Ideally every college should offer basic finance literacy for the youths because ultimately they are going to be the future of the country.
New graduates don’t know how to use their money, which gets them into debt at the start of their career and adds to lot of stress, as they create more complicated relationship with their finances than they should. This eventually stops them to think about saving for emergency and invest in retirement fund, which is extremely important in today’s world.
What is the best solution for the lack of financial education?
There are solutions to most of the problems in the world. And same holds true for financial education. This article tries to suggest what can be done to make individuals excel in the world of finance. We are not talking about advanced financial skills but the very basic knowledge which will atleast prevent them for making financial loss because of the lack of knowledge.
So here are the tips –
Put more value on saving than having
The first step is to fight against the consumer culture in which we live. It is normal to see individuals today to compare themselves with others and spend money on things which others have but are unnecessary. Spends are most commonly seen in material things. An individual needs to overcome that culture, and know that the one who in the end invests more for his long term goals earns more.
It is very important that you think about how the most expensive things are not always the best and what will give you the most satisfaction. Keep in mind the goals that motivate you to achieve something e.g. a higher education or investment in mutual fund, your wedding, a trip with friends, a new house, etc.
The benefit of having goals is not only to achieve great things, but to transform oneself in the process; a goal can be to create a financial discipline and to the virtues that should transform us.
Reading is a way of fighting ignorance. And when it comes to financial ignorance, things work the same way. To learn, you have to make a habit of constantly reading personal finance blogs and even books about money and entrepreneurship.
Work to learn, not for money
When money becomes the sole and greatest goal, the results are never good and the person lends himself to engaging in something tedious and unmotivated just because he is rich.
The secret that not everyone knows is that to have good results, you must work for learning and growth rather than for the salary you want to earn. A characteristic of successful people is that they work out of passion and not out of necessity.
Look for the opportunity to generate assets
One of the benefits of getting into good financial habits is that your eyes will be opened to see good deals that almost nobody notices. Opportunities to invest your money will always be there, it takes financial intelligence to notice them.
Whether you’re passionate about real estate, risk, brokerage, or parking lots for sale, always keep in mind all the different ways to make money and keep your eyes open – you don’t want to rely on single source of income; e.g. salary.
Don’t spend money you don’t have
Many tend to mistake their credit card as their greatest ally when, in their case, it is their worst enemy when used irresponsibly. If used properly, credit card can be very beneficial for low income earners.
The best advice is that every month you make a list of things you need to buy with your card that you know you can afford to pay for in a month. And this will guarantee that there is no whim that makes you stressed to get into debt.
Talk about money with your kids
Don’t keep all your learning to yourself; think of the possibility that your children will have a good personal finance education outside the home as very unlikely. Don’t miss this article on ways to instill good financial habits in your children – they’ll thank you for it when they start understanding the value of money.
This article has been written by Chandra Mehta.
Chandra is a seasoned banker with 35+ years of experience in banking and financial services industry. He’s a retired banker and has served as Chief Manager and Assistant Vice President in State Bank of India/or its subsidiaries.
He has authored many articles on this site (allonmoney.com).