It’s not that every rich person has a high paying job. It’s just their financial habits that make them rich. With just some minor tunings anyone can get over with personal financial dilemma. Here in this piece, we’re going to touch upon how ignorance of basic financial education can get you in the wrong pit.

Do school prepare children for the real world? “Study hard and get good grades and you will find a high-paying job with great benefits,” our parents say. Their goal in life is to provide a college education for their children, so that that can have the greatest chance for success in life. 

One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not in school. Most of us learn about money from our parents. So what can a poor parent tell their child about money? They simply say “Stay in school and study hard.” The child may graduate with excellent grades but with a poor person’s financial programming and mind-set.

Money is not taught in schools. Schools focus on scholastic and professional skills, but not on financial skills. This explains how smart bankers, doctors and accountants who earned excellent grades in school may still struggle financially all of their lives. Our staggering national debt is due in large part to highly educated politicians and government officials making financial decisions with little or no training on the subject of money.

Here’s a quote from Robert T Kiyosaki’s ​rich dad poor dad​- “if you’re the kind of person who has no guts, you just give up every time life pushes you. If you’re that kind of person, you’ll live all your life playing it safe, doing the right things, saving yourself for some event that never happens. Then, you die a boring old man. You’ll have lots of friends who really like you because you were such a nice hard-working guy. You spent a life playing it safe, doing the right things. But the truth is, you let life push you into submission. Deep down you were terrified of taking risks. You really wanted to win, but the fear of losing was greater than the excitement of winning. Deep inside, you and only you will know you didn’t go for it. You chose to play it safe.”

The Achilles heel of financial illiteracy in our country is reversible. The first step towards achieving this goal is understanding the basic difference between an asset and a liability. In plain words, an asset is something that puts money in your pocket and a liability is simply something that takes money out of your pocket. The real challenge here is to seize every opportunity to use your debts to buy assets that create more wealth. For instance, the purchase of a property involves mortgage, taxes, etc and thus, is a liability. Although, if one owns a rental property, the taxes and maintenance fee have to be paid by the tenant, which makes it an asset. This simple asset-liability principle can be used to maximise one’s earnings regardless of his income level.

In today’s capitalist society, in order to retain financial competency, we require a high degree of financial intelligence. Introducing children to this world right from a tender age when they are found to be the most receptive, proves to be a solid foundation in stabilising their financial future. However, a subject as complex and elusive, is difficult for a child to grasp and retain. This can be tackled using digital influence — by incorporating games, videos and apps into the classroom to facilitate better comprehension. Some of the burden for repetition and reinforcement of these core concepts must fall on the private sector where more firms ought to make a commitment to integrate financial literacy in their client-services.

Don’t stress if you’re a fully-grown adult with little or no financial knowledge, you’re not alone! India is home to nearly 76% adults who struggle to cope with the most basic of financial concepts. However, it’s never too late! Adopting simple habits on a personal level, such as budgeting and saving (cutting down on frivolous expenditures), understanding the fundamentals of stock market and its working, being aware of current market trends will surely broaden your horizons. 

A financially literate and well-informed person is an asset to the economy. With a sound perspective of where to put money, when to switch investments, which are the most trending e-trading options; a financially independent person is street-smart, secure from risky investment traps and unstoppable!

Financial education provides sufficient resources to support our highly subjective pursuit of happiness. It’s time we take a transition from ‘surviving’ to ‘thriving’.

           Ask yourself today, Are you financially literate?​  

Savani

Prajwal