You are a onetime investor, an investment pro or a college grad, you need to know how money works in this real world. It is not just enough to know how to earn money, but it is also equally important to know how to invest, save, grow and donate money too. You need to develop the ability and the wisdom to make proper decisions relating to your personal finances. This ability is not something that you can develop overnight.
Guided and methodical financial planning and education is required. Not all of us get this kind of information on our day to day basis. So, financial education is the need of the hour.
We all need to make wise financial decisions and understand the mechanics of a credit card, advantageous savings methods, consumer rights, time value of money, etc.
Is it really important?
To know if it is really important, you need to know the adverse effects that can be caused due to the lack of financial education. The absence of financial literacy can lead to making poor financial decisions that can have adverse effects on the financial health of an individual. Selecting the right kind of investment for your income levels, choosing from the wide range of insurance policies and also selecting the right kind of future investment plans – all these come as part of your right financial knowledge. Lack of this knowledge would force you to follow the herd mentality and choose the wrong products that are not just right for your portfolio.
Who needs financial education?
If you think you need to have a secure financial future, you are right. You need to have good financial education for the same. Each of us who need to have a secure financial future is entitled to have financial education. If you are an investment pro- you need to have knowledge of various stocks and market share values. If you are a passive investor you also need to have information about the various bank interest rates, brokerage charges and so on. If you are a housewife and think that financial education is not your kitty, you are wrong. You too need to have the right financial information because you have the ability to influence the entire family to secure their financial future.
A new trend is to equip the college grads with the right financial information. Various organizations are taking a step forward to make sure that the college grads are not left out too.
Are you a financial illiterate?
The level of financial literacy tends to vary according to education and income levels, but the evidence shows that highly educated consumers with high incomes can be just as ignorant about financial issues as less educated, lower income consumers.
If you are unaware of your interest rates, loan interest rates that you are paying, credit card rates etc. that you are using month on month- these are warning signs that you are financial illiterate. It is high time you boost your energy levels and increase your financial quotient- to take charge and secure your financial future.
How can you achieve financial literacy?
There are two parts of financial literacy- one is to know the financial terms and how things work. The other is to be aware of your own finances and the choices you make to secure your personal finances. You need to be aware of the basics of investment- like the SIPs, mutual funds, stock market trends and various good investment options. You need to be aware of the current interest rates, investment and savings options. These key information and facts allow you to make informed and wise decisions about your finances. Taking time to evaluate various investment and savings options, taking timely guidance and improving your financial knowledge about the day to day dealing, taking responsibility of your own financial future – all these add to your financial education- which is the need of the hour.