There are many things that we are taught in formal schooling. However, although we are taught how to add up (and many other less practical things like algebra) in maths lessons we are often not taught how to manage our money. Unless you are a lucky lottery winner most people do not have a bottomless pit of money. Most people have to manage their money. Some people are better at this than others. Many people struggle with this essential task.
Being financially literate is important to everyone – young and old, rich and poor. Parents can start teaching their children financial management from a very young age. It can be as simple as explaining that pocket money can be saved to buy something you want and starting a savings account at the bank. It can develop into something more complex such as understanding income and expenses, taxes, investments and so on. Research has shown that adult financial habits are set by the age seven years old. While financial education needs to begin when children are young but also must form part of their adult life.
Credit cards, overdrafts and short term pay day loans often obtained through websites like http://Wonga.co.za can help with getting you out of a tight spot when financial planning goes wrong or if an emergency pops up from nowhere. However, understanding budgeting, financial planning and keeping within your means is key to avoiding debt.
Money does make the world go around. How much money you have, or don’t have, affects our whole lives. From the house you live in, the car you drive, the holidays you take and the food you eat. People need to be given enough financial education to make the best decisions for themselves. Governments, financial institutions, schools and employers can all assist with financial literacy.
In the UK the Bank Standard Commission has stressed the importance of financial education stating that “more informed consumers can … be empowered to challenge banks who try to mis-sell, contrary to their best interests. More importantly, financially literate consumers are able to exercise informed choice and impose market discipline on banks”. This has also been recognised in South Africa.
The UK appears to be quite astute when dealing with financial education. It has numerous websites to assist with money management such as the Money Advice Service. On top of that in the UK financial literacy education will soon become compulsory for children from the age of 15. In South Africa the latest National Credit Regulator statistic is that 9.05 million active credit consumers have an impaired credit rating. Some form of financial literacy program seems to be an obvious answer to reducing debt in South Africa and getting the country saving.