How financial literacy can empower the young
By Tanisha Aziz
Over the decades, financial inclusion has been considered as an approach to tackle challenges such as poverty, inequality, as well as marginalisation. A truly inclusive financial method offers a secure place to keep money and to collect assets, instills a sense of dignity for all consumers irrespective of their heterogeneous backgrounds (eg age, social standing, or economic status), therefore, financial inclusion can definitely play an integral role in serving the development agenda.
The primitive meaning of financial inclusion encompasses all those processes set out to prevent certain social groups and individuals from claiming their access to the formal financial system. However, the global picture exhibits that more than 50% adults of the poorest households do still suffer from financial exclusion. Experts argue that financial inclusion is not only capable of forwarding poverty alleviation, but it also can activate a more inclusive approach of achieving desired economic growth.
Therefore, it is high time to shed light on such an important issue. The knowledge and understanding that enables people to deal with existing and future demands of individual management of finance is termed as financial literacy. It’s the ability to allocate ongoing expenses, manage savings, repayment of debt, fighting financial insecurity, and making decisions judiciously. In the modern age, the young generation is growing up in a complex society where it is imperative for them to take charge of their own financial future.
Young adults (aged 18-29) tend to possess the lowest levels of financial literacy, according to OECD statistics. The incompetence in choosing the right financial products and often a lack of attentiveness in undertaking sound financial planning is due to this financial illiteracy.
There’s a lack of awareness, relevance, and value of financial literacy in their lives. The young need to develop the expertise to guide them in different career and education options and handle any discretionary funds they may have, be it from part-time jobs or allowance from parents. Financial illiteracy may lead our youth to making poor financial decisions that can have a negative impact on their personal financial well-being, as well as in the broader picture.
Educating the young generation on financial matters is a precondition for them to be actively involved in development activities. A financially secured individual represents an economically secured nation. Therefore, the question arises: What can be done?
The role of educational institutions is not just to provide academic discipline but also to ensure economic and political order, ethical and political norms, and legislations. Financial literacy protects people from vulnerability to various circumstances.
Financial education in the school curriculum and after-school programmes, then, is an efficient policy tool. This allows students to acquire the understanding and adeptness needed to build responsible financial behaviour throughout each stage of their education.
Parents themselves may be ill-equipped to educate their children regarding budgeting, money management, credit, consumer behaviour, and other aspects of financial literacy which make it even more important for the educational sector to have concrete programs.
Educating younger generations on financial issues is crucial because the future of the economy is dependent on their success.
Nevertheless, financial literacy as a tool for money management is not enough for secondary schools. In order to meet overarching progressive goals, financial education must include all social aspects of financial transactions alongside the economic order, aspects of financial markets, and include both national and international systems of finance. To become financially capable, the young generation must have access to proper financial services and expert advice for all contexts.
Furthermore, it is crucial to change perspectives, as it is inadequate for individual money management and financial exchange procedures to only be seen through an agent’s perspective. Understanding through an observer’s perspectives on different rules, orders, and systems to let individuals make economically sound and politically just decisions, be involved in society, and contribute to political issues is also vital.
The objective of financial literacy is to produce deliberated and rational criteria that allow young people to make socially and financially responsible decisions, in other words, to empower the young generation.
Tanisha Aziz is a student of Scholastica School, Dhaka, Bangladesh.