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Importance of Financial Education

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Humankind has achieved a lot. From the barbarian age to the present there have been myriads of changes and innovations that cannot merely be listed. In the development process of different sectors, we humans have also developed “money” which has been an integral part of our life for carrying out any transactions.  Long ago, even before we discovered the money, we used to exchange goods with another type of goods. This method of exchange was not effective and reliable because people would not get the true value or the worth of the good.

After this came into the practice it was a lot easier. We could pay for the true worth of the value. Trade became a lot easier as well as faster. Money has since then been an inevitable part of our life. Various forms of money have evolved during recent years. Now there’s no need of standing in the long line of the bank for carrying out transactions. You can carry out any financial transactions just by sitting in your house. Though a lot has evolved since then, there are still loopholes and drawbacks of the money. It has created a huge gap between the ‘so-called riches’ and the ‘poor’ ones. This bridge has been created due to factors like financial illiteracy, traditional misconceptions. Financial education in a simple definition is the ability to understand how the money works.

Alan Greenspan had said, “The number one problem in today’s generation and the economy is the lack of financial literacy.” Financial Education should be taught from the primary school level only. If the kids know about it from an early age, they are the ones who will be an intelligent investor later in the future. They will have ample knowledge about the areas where to save and also spend the money. Many schools don’t practice this most of the school do not give priority to these things. That’s the reason why there are so many cases of the student being in debt during their college years only. At such a young age, they get into debt and their whole life goes on trying to repay the debt. It is one of the most important and valuable life skills that everyone should possess.

According to the S&P Global Financial Literacy Survey conducted in 2015, out of 144 countries, Nepal ranked 136th in terms of financial literacy. Numerically, only 18% of adults are financially literate, which is lower than 25%, as reported for South Asia. This data clearly shows the condition of our country. There are various misunderstandings among the people that need to be cleared out. People tend to think that saving for the future is a wise solution but it’s not always the case. Sometimes investing the money in a lot more useful sectors can be highly beneficial rather than saving. Today’s youth need to be also educated about the different types of cryptocurrencies, their uses, and their disadvantages too. This being said, the school need to include financial education in their curriculum. Not only that, we need to teach them how to invest and also get benefit from that.

Having a sound knowledge on this matter will help everyone throughout their life. Be a student, an adult or an old aged person everyone has to perform financial transactions throughout their life. Earning money is only not enough, you need to know the ways to utilize the money earned. Due to the lack of financial education, people have been unable to utilize even basic financial services. Lack of financial education is a heavy burden for our country as the investments are not being made into the proper sectors.

Another effective way of increasing financial literacy in a country as a whole is by educating women. If women are financially literate, then she can ensure that the members in her family are literate too. She can teach her kids since the small age about the importance of financial literacy which will be of great use to them and they can also help other people. This way the information will reach to a larger population.  It’s all about connecting people and sharing our knowledge. Hence, nothing can be more effective than this. Banks should also try to impart knowledge to the people of the rural areas who have little or no knowledge about this topic. Banks can introduce them about the share market as well as insurance policies. For a country to prosper economically there need to be financially literate individuals.

Hence, the government, as well as the banking sectors, should cooperate to make Nepal a 100% financially literate country.

-Anupa Khanal