Financial Literacy

How much do we understand finance? How much do we understand, how the money works? Let me share out a snippet from the inauguration speech of the 44^th President on USA. He says,” those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to suffering outside our borders; nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it”.

The president of USA has led accentuated on the importance of our behavior, the way we use our resources, the way we live our life. It’s a time when we should understand the scenario globally and should check on our actions. We have pool of youngsters, who have recently joined the work force or will be joining. It’s important for them to acknowledge what finance is all about.

Let us look at the new lifestyle of our urban nation. Work hard, tirelessly, earn a lot, pay big taxes and spend a lot. We consume more resources then we actually need and are saving less. Our super stars, at the age of 45, are recognized as youth icons where entrepreneurs like Ankit Fadia are the lost names, occasionally read on book stalls.

All of us need to understand the cycle of money. We spend a lot (mostly on credit), put ourselves into big debts, and then ask for more money as the pay. This increases the cost of us as resource which impacts the cost of production of our service. It results in the increase in the cost of the products in the market. With higher salary, we spend even more on things that we do not need actually(more than 40% of the multimedia phone users use the phone for nothing else but calls, taking pictures, and listening songs. But they buy handsets where they pay for services that they never use. The inflation hit us hard back again with the increase in cost for food and other essential items. We also waste lots of energy. It’s a country of billion where everyone wants to own a vehicle. Has anyone ever thought about the land that these vehicles will consume just for parking. We need to restrain on the gasoline that we burn in our car. The same energy which could have served around 10 people in transport is now consumed by only one person.

For our nation to grow and prosper, we have to be aware of the place and society we live in. Our high consumption and waste makes the life more miserable for the lower and lower middle class. None of us are sure how long they will be able to tolerate us this way. Their course of action can’t be predicted, but we should learn something from the incidents in Mumbai and other places. A satisfied person won’t be participating in ransacking shops. We have taken over the jobs of Mumbai, increased the cost of living so high, without caring about its effect on the society as a whole.

Finance is not just about money. It is about the power to survive in this constantly changing world. Everyone is buying a house (some have 10 houses today). It’s good if one can afford it. But those who are buying on debt (do reconsider your thoughts). A house on high loan rates can never be an asset. You can’t sell your dwelling. If you think, that in time of crisis you will sell your home and can live in a smaller home, you never needed this big house. Similarly there is lot of places where we do not use our money smartly. You can call it lack of vision; I call it lack of financial literacy. Most of us have completely exhausted our financial powers in paying back to loans and we miss on lots of opportunities of life, just because the lack of it. I am myself paying back the debt taken by my family and me for education and other purposes. And I know how hard it hits you back.

I have also seen many youngsters caught in the rat race of being better then the other. And in this race they put themselves into situation which hurt them in long run. We have to be responsible, quiescent, and have tolerance. We all have big pay checks in hand. We also need to be profound in using it.

We all need to analyze our assets and liabilities. Government need to check the assets and liabilities of our country and if required should take decisions that may not be easy.

What is required of us now is a new era of responsibility -- a recognition, on the part of duties to ourselves, our nation and the world; duties that we do not grudgingly accept but rather seize gladly. For the world has changed, and we must change with it.