The Importance of Financial Literacy in Today's Society

Financial literacy is a broad field, but I will discuss the concepts of savings and investment as specific aspects of literacy that are necessary for fintech success. At a macroeconomic level, investments are the primary mechanism for funding the development of infrastructure, enabling higher standards of living, and creating durable employment opportunities. Savings are necessary to facilitate investment, especially at a time when interest rates remain at historic lows around the globe. Therefore, it is incumbent upon the individual to take ownership of their financial literacy and to create a culture of savings within their social sphere.


The global economy is an efficient network. If one country invests in education and infrastructure, it will benefit all countries connected by this network. This is due to the interdependence of economies and the fact that money circulates through one country's economy before reentering as investment in another. However, as we see in today's world, political upheavals can lead to volatility in financial markets that can affect all countries. As such, saving money, especially with low interest rates, is paramount. In fintech terms, this could include switching to digital banking and moving money between institutions with ease.


Similarly, millennials are becoming increasingly aware of the concept of investing. According to a TD Ameritrade poll surveying over 1,000 U. S. investors under 40 years old who have at least $10,000 invested in stocks or ETFs: When asked about their current level of comfort with financial matters on a scale from 1 (very uncomfortable) to 10 (very comfortable), the average response was 7. 9 out of 10; however, when asked about their investment knowledge on a similar scale from 1 (have very little knowledge) to 10 (have great knowledge), their average response was 6. 8 out of 10 for an average difference between comfort and knowledge of 1.1 points—in other words, they feel very comfortable with money but consider themselves moderately knowledgeable regarding investing strategies and products available on the market.





This suggests that while millennials are open and receptive to new ideas and technology-driven products that simplify finances and investments—they should be viewed as potential clients who could help grow fintech companies' bottom lines through profitable investments instead of only increasing bank profits by reducing brick-and-mortar branches' foot traffic by using digital tools for banking transactions instead of visiting a branch location without an associated fee for doing so via mobile apps' convenience alone.





Saving money is not just for those who have little cash but also for those who already have plenty stashed away—whether it be through savings accounts or retirement funds or other investment vehicles that earn interest income or dividends—and the concepts behind saving are similar regardless if you're trying to save $100 per month or $1 million per year: Try making small changes you can stick with long term rather than big changes you will likely give up on, such as downsizing your car or moving to a less expensive apartment. Look for ways to cut costs, such as cutting out a few unnecessary purchases each month or eating at home instead of eating out. This strategy is akin to managing your spending when you have limited cash flow (e. g., if you only have $100 per week to spend on food) rather than waiting until you have more cash once your paycheck hits your account and then taking all the money on one trip to the grocery store—which can be wasteful as you end up throwing away what you did not use before it expires.





Investing is not just for those who are retired and no longer working but also for millennials who wish to put some of their excess income into an investment vehicle, whether it be in the form of mutual funds, index funds, bonds, or stocks.


There are many online resources available that explain investment basics; however, I will outline three ways millennials can successfully invest: The first way is investing in yourself—that is, investing in education and training with a long-term view towards future employment opportunities and higher salary potentials instead of focusing solely on immediate needs instead of long-term goals.


The second way is by contributing money into retirement plans such as 401(k)s offered through employers with matching contributions from employers if they offer this benefit or potentially opening up individual retirement accounts (IRAs) if your employer does not offer a retirement plan option.


And lastly, the third way is by using "tax-advantaged" vehicles such as Roth IRAs and 529 plans for saving for college tuition or other specific expenses like paying off student loans faster without having to pay additional taxes on these withdrawals—making them a good choice for those looking to save money without incurring penalties from the government due to additional income tax owed.


In summary: Strive towards becoming more financially literate by practicing smart financial habits now so that we can collectively build financial security for ourselves and our families both now and in the future; take ownership of our personal finances with an eye towards prudent savings practices; and take control of our investments so that we may achieve lasting financial security through self-education, retirement planning via tax-advantaged accounts, and investing wisely in stocks or mutual funds depending upon our risk tolerance levels or other options available depending upon personal circumstances such as real estate investments (if allowed within an investor's country's laws).


Finance Technology (FinTech) refers to companies that provide products related to finance functions such as payments, lending services, wealth management tools with access via mobile devices alone instead of requiring physical locations' ability due to regulatory changes worldwide since 2008 when the subprime crisis occurred —a time when traditional banks were unable to provide capital needed for small business owners' growth due overzealousness related to underwriting standards prior that decade's recession—and has led many people around the world to seek out alternative and innovative financial services.





As such, FinTech grew to over $2. 3 trillion in assets under management (AUM) as of 2019 and is expected to reach over $6 trillion in AUM by 2024. However, even though fintech provides useful tools that can help people save money while investing wisely, they also create a perceived divide between the "geeks" who understand how these tools work and those who do not—and this is not good for society at large. This is because fintech companies are owned by the same people who are the tech savvy early adopters whose primary goal is to increase their own wealth rather than caring about helping others increase their financial literacy; however, this does not have to be the case with proper planning.


Fintech companies can make a difference for society if they incorporate concepts of financial literacy into their products/services offered—which will lead to more people becoming financially literate and building a culture of savings that will benefit society at large by increasing lending capacity for small business owners' growth, enabling higher standards of living with durable employment opportunities, and creating durable employment opportunities for displaced workers from industries that no longer exist due technological advancements such as coal miners who used to work in mines but now are in need of job alternatives due to clean energy policies instituted by governments around the world that are focused on reducing carbon emissions related to climate change.





Fintech companies should focus on incorporating concepts of financial literacy into their products/services offered today so that we can collectively build financial security for ourselves and our families both now and in the future; take ownership of our personal finances with an eye towards prudent savings practices; and take control of our investments so that we may achieve lasting financial security through self-education, retirement planning via tax-advantaged accounts, and investing wisely in stocks or mutual funds depending upon our risk tolerance levels or other options available depending upon personal circumstances such as real estate investments (if allowed within an investor's country's laws).



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