Introduction
To begin with, high paying salary is not the solution to anything. Money cannot and does not buy happiness; it only expresses half a thought. It might be said properly, money can not buy happiness, until we are aware of how and where we need to use it correctly. The majority of us believe and a few suppose that a liberal salary might resolve the problems associated with finances. But alone money can’t do that. A lot of people have trouble enough in debts, bad spending habits and financial pressure even after earning a good salary, not due to poor spending habits but simply because they are not educated in the field of finance.
Financial literacy is simply having the power to work out what you spend, where you spend and when you spend. It is slightly comparable to budgeting but budgeting is an aspect of financial literacy. It also entails knowledge in saving, spending pattern, knowledge in debt control and long term planning on finances.
What is Financial literacy
Financial literacy is a cumbersome term but it only implies the knowledge or the ability to control what you make. An average earner may be more stable in the context of debt management, budgeting, saving, financial planning and investing than an individual having a high salary due to a small step i.e. planning his or her expenses. This means that at a tender age, individuals find it difficult to recognise the planning framework. When a person gets money without learning how to handle them, he or she makes poor financial choices and experiences certain circumstances in certain circumstances. It also makes individuals learn the effects of their spending habits as well as learn how to make their own decision as to income or finance. It does not only instill confidence in managing money independently but also lessens stress in the long-term as far as finance related issues are concerned.
Why a high paying job alone is not enough
Well paying employment is not sufficient. Even though it guarantees comfort and luxury, but not a very long duration in case it is not handled adequately. Most of the high-income earners have financial challenges that make it hard to budget, plan and know their expenditures. As the income rises, the cost of living is likely to go up as well, which might lead to saving very little even with an increase in income level. Individual is an irresponsible spender of stuffs, services and daily needs on credit card without planning about the emergencies. This puts a strain of finances and pressure even to well-earning people. Conversely, a financially educated person would be able to spend their money in a sensible manner, no matter their level of income. This is justification that making good amount of money is not enough but knowing how to use it is what really matters.
Importance of Financial Literacy in daily-life
Financial literacy is very critical in the daily life where rapid and critical use of money is required. Young adults who are in hostels and apartments and are students are known to have unanticipated expenses. It must also be financially conscious when making decisions such as emergency visits home, medical emergencies or when spending money on basic need such as medications or personal hygiene. The consequences of these situations may be stress and dependence on people when one is unprepared in the early years.
Having the money in one hand without panicking or feeling guilty because you know what to do with it is simple. Financial literacy also enables you to prioritize your important needs as compared to the wants which are temporary. Such experiences demonstrate to adolescents and adults that money management is not only about spending money on daily basis but also being ready to get into life without any plans. This does not mean that one has to earn a lot of money but to be financially literate because of this practical knowledge.
Importance in students’ life
Children and students have to learn to use money independently since that is the first time they are supposed to use money. It is at this stage that young adults begin to make independent financial choices in form of pocket money, monthly allowances, stipends or part-time employment. You can also spend money carelessly without knowing what you are doing and this can become a stressor.
Early education on matters related to money would make you less carefree and disorganized. It educates the students on the way to spend their money wisely and not to spend too much money, but to save it and use it in the future. Those that develop these habits will remain in them until the end of their lives. Provided that students are taught to spend their money wiser at an early age, they will be able to provide themselves with the knowledge when it comes to spending their money properly and saving money without making the mistakes that all students are prone to make in regards to finances. Thus, the ability to handle money is one of the most important skills that should be learned to secure and independent future.
Habits that build financial literacy
The process of learning financial literacy does not involve complicated measures, only the little measures that must be taken as an ongoing process. One of the best is to keep a track of your expenses. You can start to be more conscious of your spending with even the little purchases that you make. Planning and being responsible is also learned in budgeting a monthly allowance by ensuring that money is spent prudently on needs, wants and savings. Another important habit is to avoid spending (improperly) by impulse or in a hurry. By thinking before buying, you are able to make better choices as compared to using your emotions. Saving even a small sum of money will help one develop self-control and stick to the saving habit. These small savings will eventually accumulate and make you have more confidence in your money. There is no other way to enhance your financial literacy better than experience.
My views
In my opinion, all people should become financially literate at a tender age. The understanding of the functioning of money and enables us to make better decisions and avoid unneeded anxiety. It shows us how important it is to save the money even in inconsequential amounts and makes us think about what we buy before buying it. Sound money management will help students and young adults in general to attain independence and self-confidence. I think that it is more about becoming responsible and prepared to live in the real-life situation rather than being rich.
Conclusion
To sum up, financial literacy does not only involve the knowledge on how to manage money; it is also the ability to make intelligent and wise decisions regarding money. It is true that a higher paying job will enhance your mood, yet will not ever leave you sufficient money should you fail to spend it in a proficient manner. Individuals that know how to spend their money are able to plan their budgets, address the emergency situation and eliminate unnecessary stress.
Education of children and adolescents on money at an early age will make them more confident, independent, and responsible in the future. It assists them to make good decisions in real life issues concerning money regardless of the amount of money they earn. It is far better, therefore, to know how money works than to make more of it. Knowing your money will also make you lead a stable, secure, and moderated life.
