Financial literacy: the ability to understand how money works
Individuals need to take responsibility of their finances with the rate at which life expenses are rising than ever before. Alot of us are more concerned about having financial freedom. To be truly rich includes not only that but developing “rich meaningful relationships, enriching your health and enjoying a rich balance between your career and your personal life.”
Research has shown that women have lower understanding of what financial literacy is, the more financial knowledgeable you are the better you make good financial decisions. The truth is that, there are several explanations for why higher financial literacy translates into greater wealth. But to provide better tools for financial lieteracy, we have to assess what we know and what we need to know about financial literacy thereby bridging the gap between the two.
financial literacy has been proven to affect both saving and investment behavior and debt management and borrowing practices.
Planning is therefore, a very strong predictor of wealth, it has been proven that those who plan arrive close to retirement with two to three times the amount of wealth as those who do not plan. Several studies have documented poor debt behavior and its link to financial literacy. So next time you are giving out that loan do consider the person’s financial literacy.
Nourishing your own spirit and soul is also an essential requirement. Take time to explore and improve yourself. The more you learn about yourself, the more you create time to think, understand how you feel and know your true purpose and that way your life will flow. From there, you’ll begin to make better choices based on you knowing the right thing to do.
Many people are just after immediate gratifications which include buying outfits, cars, and furniture among others. And if we should localize this, we all remember how our women constantly engage in buying ‘ashobi’ or ‘anko’ just to fit in during almost every wedding they happen to be invited to. Girls go helter skelter just to get that money, likewise when it comes to makeups. We spend a considerable amount of money on makeups before attending weddings, even if to say we’d wake up the next day with empty pockets tomorrow.
Don’t just employ the “live-for-the-moment attitude” while giving little or no thought to future consequences. Some people constantly do things that exceed their income often leading them to some unnecessary debts. We are not saying we shouldn’t do all these fine things. Living a fancy happy life is good, but remember , there is always some negative consequences that comes along with negative habits. So instead, create positive successful ones to replace them.
Finally, financial literacy across countries are correlated with ineffective spending and financial planning, and expensive borrowing and debt management. We all need the knowledge to manage our own finances.