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Basically, anyone who can make good decisions about their money is financially literate, irrespective of their educational background.
Financial literacy is one aspect of knowledge that is very essential for everyone. It is more than a status, it is a combination of different money skills that include how to use money wisely, how to calculate money, how to invest, how to save and grow money.
If at the age of 5, your child is aware that the N1,000 she received from an aunt can amount to N5,000 if she adds it to the N4,000 she gave you earlier to keep for her, she is already exhibiting the basics of Financial literacy. How about the old woman who sells fresh fish in the market? She can give accurate ‘change’ to her customers and can sum up her sales for the entire month, but keeps her life savings under her pillowcase, is she financially literate?
The concept of financial literacy encourages individuals to invest their resources in a bank at an interest, rather than keep money at home. This is where Financial inclusion comes in.
In the past recent years, the Nigerian Financial industry has been on a campaign to sensitize the under-banked (people who do not own bank accounts) to embrace the modernized method of saving – banking.
The Difference between Financial literacy and Financial inclusion
After knowing how to manage your resources within your means, it is essential that you trust a bank with your money. Financial literacy provides individuals the money skills they need while Financial inclusion gives them access to useful and affordable financial products and services that meet their needs – from all money transactions, payments, savings, credit and insurance.
Why you need to be a Financial literate
- Gives you all the knowledge on how to handle money
- Helps you plan effectively with your money
- Makes you bankable
- Protects your money
- Makes you a better business man/woman
Read Also: The Cure for Financial Anxiety
According to The National Financial Inclusion Strategy (NFIS), 46.3 per cent of Nigerian adults do not own or run a bank account, as at 2012. The goal of the organization is to reduce the number of financially excluded Nigerians to 20 per cent by 2020.
How to improve your Financial knowledge
- Read to understand the concept of banking and savings.
- Open a bank account
- Invest on small scale investment packages like Treasury bills, Mutual funds, Spend2save, etc.
- Stay loyal to your financial budget.
In celebration of the World Literacy day, we urge you to spread the word about Literacy and help more people embrace knowledge, especially information about their finances.
Check this out: How to Start Investing In Your 20’s