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Financial literacy promotion

 

posted by Focused on August 1, 2009 @ 6:34 am in EDUCATION

 

          Literacy and education are commonly accepted as fundamental means of removing individuals and societies from poverty. Being able to read and write will help one overcome his or her circumstances but it is just a start. Complementary steps must also be taken. One of them involves developing one's financial literacy.

 

          Financial literacy can be defined as a person's ability to understand how money works and how to manage it. A financially literate person is able to make informed judgments and make effective decisions regarding the use and management of money throughout his or her life. The information required for one to become financially literate is still too absent from most school curricula.

 

            Having realized this, one should not be surprised that a large number of highly-educated people still fall for disguised Ponzi schemes. Often referred to as 'alternative investment schemes', these pyramid schemes succeed in fooling people by taking advantage of people's financial ignorance. Cash Plus (in Jamaica) and the Madoff Scam (worldwide) have claimed the fortunes of many professionals. A conventional degree does not automatically lead to financial literacy.

 

            The recurring argument uttered by the people scammed is that there was nothing illegal about the schemes. That is true but the fact that there is nothing illegal about something does not mean that it is not questionable. Cigarettes are legal but does that mean that one should smoke them and expect to have them benefit one's health? Financial literacy brings the awareness and judgment necessary to avoid such pitfalls.

 

               Breaking the cycle of financial illiteracy can be challenging but is vital in order to reach and sustain any form of prosperity. There are a variety of sources that one can turn towards to develop his or her financial literacy. Authors like Robert Kiyosaki have written several books about the topic. The current economic slowdown might have caused people's awareness of the importance of financial literacy to rise.


              Schools should teach children about financial literacy from an early age. Society will only benefit from that. Until society reaches that stage, it will be up to individuals to take such initiatives.


           Educated and financially literate citizens naturally lead to a stable and prosperous nation. Financial literacy also has an impact on crime. An employee will not steal from his or her company if that person fully realizes that his or her behavior can only lead to the company shutting down (for loss of revenue). Shortcuts in life are an illusion, the laws of money are no exception to this. If something is to last, it needs a solid foundation.

 

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Tags : financial literacy, money management skills, prosperity, developement, wealth building,financial education
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