Being financially educated from an early age is more important than ever. According to Standard & Poor’s Financial Services, less than 25% of adults located in South Asian countries are financially literate. In India, 75 percent of adults do not know basic monetary concepts, leaving the country’s average severely lagging behind the world average. Indian students are expanding their knowledge abroad and locally, so why should they do the same for their monetary skills? As the conversation intensifies around learning about money from an early age, let’s explore the reasons to make it a priority.
Fighting The Debt Battle
Becoming financial educated equates to knowing your financial options. Household debt is on the rise in India; with personal loans rising by almost 60 percent in 4 years. In addition credit card spending is slowly rising while deposits continue to decline; widening the gap. This means the Indian consumers are slowly living off of credit. Having the knowledge to make more informed monetary decisions can heavily reduce the percentage of people turning to debt and also help those that are to become debt free.
Keeping The Economy Afloat
Teaching children about money as they grow results in a plethora of benefits later in life. First, it teaches them responsibility when it comes to money. It also allows individuals to get comfortable with management tools and techniques such as budgeting. For the economy, this is a welcome change. Being more informed about their finances increases the chances of people saving more and reducing personal debt. High levels of personal debt can actually cause spending in the economy to slow and eventually result in a stagnant economy.
People are also less prepared for retirement which means that the burden on state resources increases with more seniors accessing aid. Having better knowledge about money also means consumers will become more credit savvy; exploring and getting the best consumer credit deal. Finally, financial learning tackles the increasing income inequality in the economy. In India, the top 1 percent of the population account for 73 percent of its wealth.
Achieving Lifetime Goals
A large part of achieving goals comes with planning. Planning for lifetime goals and requires much more than sketching or daydreaming about ambitions; it takes calculations and budgeting as well. No matter your goal chances are that money will be involved in some way or the other. Thinking about your plans for your retirement? That requires financial planning to work out how you will live off of your retirement fund without income or how much you would need to achieve the desired retirement lifestyle. Planning to head to college? Becoming financially savvy when it comes to budgeting, student loans (and interest rates) will be the best decision you make on the road to your degree.
Regardless of the stage of your life, finances play a key part in achieving those goals. Becoming familiar with the concepts surrounding your finances will remove confusion and aid you in achieving your goals. When you are armed with better knowledge, you will make better choices.