Financial literacy is a core life skill for everybody, and this is compounded in 2021. Children grow up in increasingly complex worlds where they will eventually need to take charge of their financial futures.
Financial literacy is understanding financial, credit and debt management. This knowledge is necessary to make financially responsible decisions that are vital to our everyday lives because it has a large impact on everybody.
Families and individuals need to balance their budget, buy homes, fund their children’s education and ensure a stable life after retirement.
Making financially conscious decisions is more important than ever in these trying times, especially to avoid being heavily in debt.
The importance of financial literacy is immense, as a youth who does not know how to manage their finances properly is not able to make informed decisions and can easily fall into various financial traps unknowingly.
This is exceptionally so, as the financial landscape is ever changing. Now a global marketplace, there are more factors that can influence it.
The rapidly changing environment created by technological advances such as electronic trading makes the market more volatile.
With the popularity of online shopping increasing, especially during lockdowns, impressionable youth are prone to spending and overextending credit to get the latest and greatest. This is an easy way to accumulate debt – and fast.
Banks and credit card companies take advantage of poor financial literacy by offering various credit opportunities to their consumers. Without the proper knowledge, it is easy to walk into financial troubles and a life of debt.
Most youth have very little understanding of finances, how credit works and the potential impact on their financial well-being for many years.
This lack of financial understanding is one of the main reasons why many youth have problems with saving and investing.
Financial education should be a continuous process, from childhood to adulthood. Some parents may be ill-equipped to teach their children about money or have a low level of financial literacy.
The responsibility lies in learning institutions to educate the youth. Unfortunately, schools often neglect these core life skills, leading to youth with poor financial literacy growing into irresponsible adults, particularly on financial matters.
Financial literacy should be part of the school curriculum, as it is a long-term subject. Including it into curricula from an early age allows children to build knowledge and skills for responsible financial behaviour.
Children need to be taught financial literacy from an early age in order to develop the skills needed to manage their money when they become adults.
They should understand how to manage any extra money they have, whether from allowances or part time jobs.
When the youth are financially literate, especially in such a crucial time of their lives, they are better equipped to make good financial decisions.
Being financially literate empowers them on how to save and invest to generate wealth.
Creating a financial roadmap is difficult in these modern times, as there can be many obstacles in the way.
But with proper financial education and a firm grasp on financial literacy, the youth can be confident in easing their money burdens.