By: Dr. Reyaz Ahmad
Financial literacy, sometimes referred to as financial skills, is the understanding and capability to efficiently handle one’s own resources. It entails having a strong grasp of a variety of financial concepts, including budgeting, saving, investing, comprehending credit, and making wise financial decisions.
Why is it so crucial right now?
Financial literacy is more important than ever in the quickly changing 21st century. Financial decisions have become more complex and difficult because of globalization, technological development, and an increasingly complex financial environment. Young people are exposed to a variety of financial services and goods, such as credit cards, loans, and investment opportunities. They might have trouble navigating this complexity without the right financial abilities, which could put them in danger of making poor financial decisions.
In addition, the modern world is characterized by increased consumerism and simple credit availability, which facilitates debt accumulation. Poor spending habits, excessive debt, and financial stress can all be caused by a lack of financial education. Financial literacy gives children the power to make wise decisions and lays the foundation for a stable financial future.
Should it be covered in the school curriculum?
Unquestionably, financial literacy needs to be a key component of the academic program. We can develop financially responsible people at a young age by including financial education in the educational system. Unaffected by their background, schools are one of the most accessible and inclusive venues for teaching all pupils important financial skills.
The ability to manage money properly, make plans for the future, and comprehend the possible effects of financial decisions can be developed by children with the aid of financial literacy education in the classroom. By lowering the burden of debt and boosting general economic stability, this information can benefit everyone’s financial well-being, both personally and for society.
Benefits and drawbacks of lacking financial expertise:
Benefits of having financial expertise:
- Financial self-assurance: Students who are financially literate are more likely to feel competent in handling their funds, which promotes better judgment and reduces financial stress.
- Long-term planning: People who are financially literate are more likely to identify and work toward long-term goals that will increase their financial security and independence.
- Risk reduction: Financial literacy enables students to recognize and reduce potential risks related to loans, investments, and other financial decisions.
negative effects of missing financial expertise:
- Debt accumulation: Unaware of the repercussions, students without sound financial knowledge may fall into the trap of piling up debts, such as credit card debt and student loans.
- Susceptibility to fraud: Students who lack financial literacy are more likely to fall victim to fraud and financial scams.
- Limited opportunities: People who lack financial literacy may pass up excellent investment options, which results in missed opportunities for financial success.
How to develop financial literacy:
Developing financial literacy involves regular work and study. The following actions can improve financial literacy:
- Benefit from educational tools: Several internet platforms provide free financial materials and courses. These are resources that students can look into to get a strong foundation in finance.
- Read books and articles: There are many books and articles that cover a variety of financial topics and are authored by financial professionals. Reading such books can help students learn more about personal finance.
- Ask for mentor ship: Parents, instructors, or financial consultants can offer pupils insightful advice on money-related issues.
- Gain knowledge through experience: Encourage pupils to begin handling their finances at a young age. They may, for instance, make a budget, start a savings account, and look into low-risk investment possibilities.
- Develop critical thinking skills: Teach kids to scrutinize financial data and weigh the pros and cons before making decisions.
Conclusion
Financial literacy has emerged as an essential component of contemporary living. It is now required as students enter adulthood to provide them with financial literacy training. Students who receive financial education at school can be equipped to handle their money properly, make wise financial decisions, and ensure a more solid financial future. We can raise a generation of financially responsible people who can successfully navigate the challenges of the twenty-first century by investing in financial literacy.
The writer is Faculty of Mathematics, Skyline University College University City of Sharjah, UAE. reyaz.ahmad@skylineuniversity.ac.ae>
