The exchange of goods and services is facilitated through the universal acceptance of financial mediums like money. Therefore, it is important to understand finance to maintain position within the society.
Need for finance management
The beginning of the 21st century has seen the introduction of various products and services in the market. With populations on the rise, every product seems to have attained its own customer base. While cash remains prevalent as a medium of exchange, the dawn of capitalism accompanied the need to make things rapid.
This has led to the introduction of various mediums like credit and debit cards. With the allowance to digitally exchange money, making transactions has achieved an exponential network. Young students can purchase goods and services using their credit cards. While this may seem attractive, it can lead to the accumulation of enormous debt.
Increasing financial illiteracy
Lacking financial literacy can be very damaging to an individual’s long-term financial success. Banks have an enormous rate of interest. Young people, who fail to understand this significance, spend their money in limitless tradition. According to S&P Global FINLIT Survey and Global Findex database, account owners tend to be more financial savvy but plenty of them lack financial skill.
Globally 38% of account owning adults are financially illiterate, as are 57% of account owners in major advanced economies and 30% in major emerging economies. This is concerning, considering financial literacy has a major impact on a country’s economy. If an individual fails to manage their finances, it can lead to them being perceived as a financial lability.
Managing financial mediums
Financial management goes a long way. Not only does it make the individual smarter, but it also helps scope out a safe retirement plan. Individuals with knowledge in finances can manage their time by getting involved with passive income streams. While developing financial intelligence helps is the management of current funds, it also helps one gauge the economic landscape.
Financial management needs to be smart and efficient. Several individuals fail to realise the existence of finance multipliers like mutual funds. Making investments is a difficult task and requires the utmost attention. These can help ramp up your finances over time and yield astounding benefits. Financial knowledge ensures enough savings for events like Covid-19 as well, that made many individuals face economic turmoil.
Financial education does not occur in a vacuum. It is an isolated incident. For financial literacy to gain traction, it demands awareness programs facilitated by the government and educational institutions. This can prioritise their importance from the beginning. Financially literate individuals can spread this importance within their families and by hosting events that can ensure widespread influence.
The global market is interwoven and demands solidarity. For the rich to turn out profits and the poor to attain finances, the economy demands cooperation. Every business needs customers. Through financial literacy, this stream of customers can be expanded, benefiting both parties. Everyone is a stakeholder, for the world to prosper economically, it requires collaboration.