Financial Literacy – Still a long way to go?

Month-end financial blues?

Your bank balance is draining at a fast pace, that you are desperately awaiting your next month salary?

Then yes! Join the club of majority youngsters living paycheque to paycheque! What’s the reason?

Though external factors like Rising inflation, Soaring cost of living, Massive layoffs etc., play their part, At an individual level, most of the youngsters are not financially literate.

As a child, We go on to hear lectures from our family members about the importance of Savings, Investments etc., without any practical knowledge on what they really meant.

Even schools today, fail to teach basic personal budgeting to students during their learning phase.

STATISTICS TO SUBSTANTIATE:

Consider the terms: Budgeting, Credit, Insurance, Investment, Debt etc.,

Most of the working population just freak out on hearing these terms and continue to worry during the end of every month.

According to a survey, about 46% of the Gen Z and 47% of the Millennials are exhausting their salary even before they receive their next month salary. This is the case, not only with youngsters but also among high earning adult population.

In USA, Amid high inflation, 36% of the employees earning $100000/more say that they are living paycheque to paycheque.

1. About 41% of the students report that there were no Personal Finance classes in High School & about 40% require better understanding on the student loans.

In India, Only 27% of the population are financially literate, whereas countries like Norway, Sweden and Finland has Financial Literacy of about 71% each.

Even Adults lack knowledge on managing their finances. This is evident through

1. Not filing taxes.
   • Only 6.25% of the entire Indian population filed Income tax returns for the year 2019-20. The population in taxable range is 23%.
   • Among a few IT payers in India, many of them struggle to file IT returns.
2. Unclaimed profits and premiums.
   • By the end of 2020, an amount of 24580 Crores went unclaimed in Indian Insurance companies.

It is astounding to know how much the lack of financial knowledge costs!

Many countries have recognized this fundamental problem and are proposing solutions for that matter like,

1. In United Kingdom, Personal Finance is made mandatory for all British schools since 2013.
2. 1/3 of the states in USA have made it mandatory to teach Personal Finance as a subject.

SET YOUR BASICS RIGHT!

Here are some ideas for an individual to manage money better.

1.TRACK YOUR EXPENSE!

Monitoring them on a regular basis shall gradually reduce unwanted expenses.

2. FOLLOW 50-30-20 BUDGET RULE!

1. 50 for NEEDS – This includes Rent, EMI, Insurance, Groceries, Monthly Bills etc.,
2. 30 for WANTS – This can include Movies, Parties, Electronic Gadgets, Dinning out etc., However these expenses are optional and might vary between individuals.
3. 20 for SAVINGS – This is where most people tend to lose their track. But, Trust me this move can dramatically change the course of your life.

3. KEEP UP WITH INFLATION:

How do we do that?

INVEST! This is because, Savings tend to lose value to Inflation. But Investments confer returns through interest rates as years pass by.

Investments could be Mutual funds, Stocks, Gold, Real estate etc., which might seem risky at times but can ensure that your money grows!

As of now, It is important to invest our time in understanding PERSONAL FINANCE to make wise FINANCIAL DECISIONS because, In the end,

MONEY IS FREEDOM!!!

To read more articles on Economics click 👉 https://www.scrolledstories.com/category/economy