Financial illiteracy affects all ages and all socioeconomic levels and the lack of it may lead to poor financial choices that can have negative consequences on the all-round well-being of an individual. It can cause many people to become victims of predatory lending, fraud and high interest rates, resulting in bad credit or bankruptcy.
The lack of financial literacy can lead to large amounts of debt and poor financial decisions. Research studies on financial literacy have shown that most financial consumers lack the ability to understand and effectively manage basic financial concepts or products. A lack of financial literacy education is responsible for poor money management skills and below-par financial planning for business and retirement.
Here are some of the effects financial illiteracy can have:
Prohibits individuals from becoming productive members of the economy and society in the same way that the inability to read or write disadvantages generations Decreases the chances of assessing financial risks or opportunities. This makes financial choices riskier and potentially damaging Handicaps anyone seeking to be financially secure. For example, financial illiteracy can increase the chances of losses due to fraud or scams Magnifies the physical and mental issues associated with being in debt and lessens the chances of finding an appropriate debt solution Financial illiteracy can have detrimental physical, mental and socioeconomic effects on people of all ages and all walks of life.
Whether a person is salaried or is self employed, whether they have a loan for business or have received compensation / subsidy under a government scheme everyone needs an understanding of basic financial concepts. Truth be told, understanding finance even as a basic life skill is rare even among the so called educated persons leave alone being financially literate enough to run a successful business. The result of this is that many businesses fail and the social goals of socio economic empowerment are not achieved.Solution:
Financial literacy equips us with the knowledge and skills we need to manage money effectively. Without it, our financial decisions and the actions lack a solid foundation for success. Financial education is a basic life skill that has a direct impact on personal well-being. It the foundation of your relationship with money, and it is a lifelong journey of learning. Most importantly financially literate people help create stable communities, and research has shown that financial literacy reduces income inequality.
According to a recent survey, lack of financial education contributes to some of the biggest social issues our country faces, including poverty, lack of job opportunities, unemployment, and wealth inequality. Results & Impact: Financial illiteracy is particularly acute for some demographic groups, especially women and the less-educated. These findings are important since financial literacy is linked to borrowing, saving, and spending patterns. It is established that financially literate individuals do plan better, save more, earn more on their investments, and manage their money better in retirement.
The desired result of this project is that our beneficiaries will understand and appreciate basic financial concepts and learn to use this knowledge as a tool to plan their lives and businesses better. It will make them more confident and better equipped to face difficult finance related life situations with relative ease.
A better understanding of finance will result in more stable families and impact positively communities which otherwise suffered the effects of ill informed financial decisions. Stable communities will result in socio economic empowerment of the targeted communities and help in achieving the corporation’s mandated goals.