FINANCIAL LITERACY: A 21st
CENTURY SKILL
And How Can It Help Students Finance
Their Careers
Everyone’s aware of finances and its
importance for a sound life, everyone’s aware of literacy and we pay immense
weightage to it, but what exactly refers to a combination of two essential
parts of life?
WHAT IS FINANCIAL LITERACY?
In the most direct connotations, financial
literacy is the ability to make well-informed and encouraging financially
responsible behaviour.
Such behaviour is often inculcated and is considered
a skill to be learnt. It provides people with the ability of managing finances,
with a controlled and balanced expenditure along saving money for further
objectives and a smooth life. It also enlightens the person with methods of
increasing income and life quality, essentially about understanding the basics
of investing early on.
The primary principles of financial
literacy include:
1.
Skills and knowledge for
preparing a budget
2.
Monitoring spending habits
3.
Handling debts and planning
retirement
4.
Beneficial saving methods
Lack of financial literacy can lead poor,
uninformed and unsound financial choices that disturb a person’s economic
background and life quality, and has far reaching consequences both in the
short term and the long term.
FINANCIAL LITERACY FOR STUDENTS?
Financial literacy becomes an essential for
students to be aware of basic management skills while handling their monthly
allowances or planning for higher education. Yet, national surveys from OECD
International Network of Financial Education (INFE) reports show that the
lowest levels of financial literacy exist among young adults. Growing up in a
challenging world, students need to learn to take charge of their own financial
future.
Research (CNBC) also shows that students
with an early education in financial management have a better grip and handling
abilities as adults. What may seem meagre now, turns into a must as smaller
choices turn to bigger decisions, independent living, and a sound mind. It
helps them to better manage risks, plan and prepare for the rainy days (we all
know how uncertain life is!), avoiding debts and investing for future goals.
WHAT DOES IT MEAN TO BE FINANCIALLY
LITERATE?
1.
Becoming Future Ready: If it isn’t obvious enough, better financial management ensures a
secure future. This manifests itself through providing the tools for
self-sufficiency, financial stability and money management, by empowering and
equipping viable knowledge, skills and confidence.
Schools, while focussing
on core skill development in critical thinking, creative thinking,
communicating and collaborating, often forget about this life skill essential
for not only survival, but thriving in the real life.
Becoming future ready
includes saving money, differentiating between wants and means, budgeting and
planning for higher education financial needs.
2.
Becoming Smarter: As per the World Economic Forum, students need an amalgamation of
traditional skills and ‘Social and Economic Learning’ to be capable of
effectively communicate, collaborate or solve complex problems. Understanding
the relevancy of money in life and making well informed decisions are directly
linked to making smarter decisions for the future and having a long-term
vision.
These skills and skill
combinations equip a person with the ability to implement and experiment with
the challenges and tasks of everyday life.
3.
Becoming Independent: Understanding the basics of finances enables people to be
self-reliant in terms of money. Students can prepare for their own higher
education by making sound decisions in terms of their financing options such as
student education loads.
Budgeting will allow these
students to quickly get out of debt after graduating. This is achieved by
preparing long-term and short-term budget plans by saving and investing in the
right places, and also permit them to pursue their future prospects
4.
Becoming Employable: The art of planning is not linear – financial planning will equip
you with the necessary skills and knowledge to plan jobs, expenses, taxes and
much more. It makes you goal-oriented, helps you become more professional and
organized in your ways. It allows you to have long-term vision, work towards it
and allowing you to not only save more, but eventually earn more.
5.
Dreaming Big: The correct way to sum up all of what financial literacy does, it allows
adults to dream big and not be limited by financial constraints. It allows you
to fight through setbacks without struggling for survival, so that you never
have to give up on your dreams. It allows working hard and plan in a structured
way to live life in a desired manner and provide happiness and fulfilment to
all.
Nothing ever makes someone as
future-ready and success-oriented as financial literacy does!
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