Financial literacy or Financial education is the ability to grasp and effectively apply various financial concepts including but not limited to personal finance management, budgeting, savings, and investments. To understand and develop good short-term and long-term financial habits, it is essential to first become familiar with Finance.

Why is financial literacy so important?

Financial literacy is one of the biggest assets of any country as it promotes economic growth. A strong base of financial literacy can help support various life goals such as saving for education, retirement, successfully running a business, and many more. 

Not being financially literate has many negative consequences which depend on individuals. For some people, not being financially literate may simply lead to not being very successful in life and encountering small debts.

For some, it has many negative and calamitous effects like bankruptcy,  especially for small businesses.

Financial literacy helps people understand money, savings, purchase decisions, and their consequences.

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Financial literacy for students

Most people are not taught financial literacy in school. Our education system focuses merely on Reading, writing, and mugging up information which might help them gain theoretical knowledge but it does little to prepare them for real-life situations, it falls behind when it comes to learning essential skills on some vital and practical stuff. In short, schools focus on professional skills rather than financial skills. Saving, budgeting, and financial planning should be taught to students from the start. While it's never too late to start planning and investing, starting early has its advantages.

With financial literacy, students can make the right decisions regarding how to save money, and where to invest it. It largely helps in avoiding debts or investing with too much risk. Overall, if students understand the basics of finance they can make the right decision in the right movement.

 Benefits of financial education for students

1. It helps in generating Financial confidence in students

The ultimate goal of learning finance is to gain the ability to make better financial decisions which leads to students being financially confident.

By being well equipped with the appropriate knowledge about finances, individuals can approach major life choices with greater confidence knowing they are less likely to be negatively affected by the outcomes.

2. It prepares students for unexpected financial blows

Learning how to save money and its importance will prepare students better for emergencies. Though having unexpected expenses, or losing a source of income is always financially impactful, Being ready for

uncertain events is very crucial as it can cushion the blow. 

3. It teaches the importance of money

Being financially literate will make students more aware of the process and the importance of smartly spending money on worthy stuff rather than making hefty financial decisions that might lead to financial problems in the long run. 

4. It makes them strive for long-term goals

Students can utilize their knowledge about budget and saving, to create plans that set a course for achieving goals that might seem to be unachievable otherwise. They are more likely to set financial goals for themselves and have the desire to work toward those goals, which often means putting off the wants of today to save for the needs of tomorrow.

5. Preventing students from making financial mistakes

Seemingly smart financial choices without making a clear budget and without considering your current financial condition may have long-term implications that cost individuals money or impact life plans. Financial literacy helps individuals avoid making mistakes with their finances.

Here are some basic topics that should be taught to beginners. 

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1. Saving and spending habits

When you explain budgeting, it is crucial to mention saving as well. Make them understand that saving at least 15% to 20% of their income each month can make a significant difference. Teaching them to make sure their purchases are worth it and they are getting a good deal, teaching them to consider their options and not to purchase something that is not needed will make them more aware of their spending habits.

2. Creating Budget

Budgeting is nothing but a spending plan. Knowing where to spend money and in what amount can prevent you from unconsciously overspending. Creating a budget can help you start working towards your aspirations. Once you have created a budget, you can adjust it as needed according to your income. Budgeting is not about not spending money but spending smartly.

3. Borrowing money

Taking a loan or borrowing money is not always a bad thing. It enables you to make essential purchases, like buying a home or taking an education loan. But before borrowing money, make sure you have a way of paying it off.

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4. Taxation

Whether it be from a job, property, investment, inheritance, or any sudden gain, each source of income is taxed differently. Knowing different forms of taxation and how they impact an individual’s net income is crucial for obtaining financial literacy. It helps you maintain economic stability and increases financial gains through income management.

Conclusion:-

It is not only important for adults to learn financial literacy but these good financial habits should be instilled in children as well from a young age so that they can make sound financial decisions as they grow old.

We at Little Scholars promote financial education and believe that students should be taught how to handle money from an early age. Our main motive is to prepare our students for all aspects of life.