When we talk about financial literacy, we are referring to a set of skills that allow people to manage their money wisely. For better understanding, being financially literate means you have an understanding in areas like; budgeting to manage money, setting financial goals, paying bills and saving money, basics of loan and how investing works.
Financial literacy matters at many levels. From a social welfare perspective, it matters greatly whether or not people can manage their financials affairs wisely and live within their means. Financial literacy is not something that one will just know magically and it is sad to know that our educational system plays little or no part in teaching personal finance in school. Some parents and family do not have a deeper knowledge that children can learn.
I am strongly of the opinion that parents owe it as a duty to teach their children about managing money at a very young age. But, we live in a society where teaching financial education to children both at home and in school is oftentimes greeted with heavy scepticism. Unless you make an effort to learn on you own or your parents were able to teach you in some informal way, becoming financially literate is entirely on your court. Yes, you can point fingers at your parents, the educational system, your environment, etc. While all these factors have some effect, you alone can change your lack of financial knowledge.
Financial literacy cuts across many facets of our lives and the financially astute recognise the wisdom of sound financial planning from an early age and, by so doing, improve their chances of achieving their financial goals. Financial literacy is very important in our society, especially amongst our youths because it helps them to; differentiate their wants from their needs, understand cash flow and how to make better decisions with regards their investment choices.
The financially literate, know how to create a list of needs and wants. Needs are things you must have to survive: food, shelter, clothing, transportation. Wants, on the other hand, are things you would like to have but aren’t necessary for survival. Knowing the difference between the two, and being mindful of the distinction when making spending, helps in your financial wellness. You’ll need to arrange your needs and want in a scale of preference and define where your money goes first. This is not only applicable to your current expenses but also your set goals. For example, saving money to buy a phone for your girlfriend on her birthday should fall under wants, while stashing cash to build a house should fall under your needs.
Nigeria is regarded as the poverty capital in the world and I believe the government can do a lot more to elevate people out of this state. If possible the government could introduce financial education courses in our school curriculum, to prevent the unborn generation from increasing the statistics of poor people in the country.