Inadequate financial literacy (FL) as much as inadequate reading and writing skills prevents a person from managing daily living and working. FL is the ability to understand and manage money to achieve specific goals. Life is not all about making money. However, without understanding the fundamentals of financial aspects of your life, you may be disadvantaged and sometimes appear irresponsible. You see finance everywhere, from your purchase of car, hosing, investments in education and retirement. For concerned citizens, ignorance of finance has become more costly ever.
FL may affect students’ academic success. Researchers have found that college students’ financial well-being affects their mental and physical health, academic progress, and their placement after graduation. FL helps you develop attitudes, behaviors, and competencies to enhance your financial well-being. If you want to keep your body healthy, you should understand how to exercise regularly and eat a healthy diet. In the same way, in order to keep your finance healthy, you should understand the basic skills to manage your money such as how to match the streams of income and spending, save for short-term needs, invest for long-term goals, and use credit. Whether you work for a company or run a business, your financial decisions will always be about spending, saving, investing, and/or borrowing. The fundamental concepts in FL allows you to evaluate the consequences of your financial decisions over time. Considering the consequences of your actions will make you wiser.
A happy and responsible life requires not only good relationships with God and other people but also a good relationship with your money. FL is to understand the basic skills required to make informed decisions about your financial matters. It is not just about cutting your spending and saving. It is about understanding and enhancing the overall value of your life-time money flows. Typical financial goals may include gaining financial independence, buying a car or a home, getting education and career training, or contributing to charity. FL allows you to identify the basic steps and and set priorities towards your goals.
It is my hope that this post contributes to enhancing financial literacy and provides resources to help students make better financial decisions for their future. Institutions of higher education should offer financial education and resources that focus on personal financial management to help students and graduates with information and skills to effectively manage their finances.