Is Financial Literacy Important?

On the subject matter of the financial markets, much progress have been made on the regulatory front - but little has been done on the education front.

I personally feel concerned that so little personal finance training is given to students in secondary, tertiary or to employees in the workplace.We would not allow someone to get in the driver's seat of a car without requiring driver's education and licence and yet we allow our citizens to enter the complex financial world without any financial education. An uneducated individual armed with credit cards and access to mortgage can be as dangerous as someone who is out driving on the streets without a valid licence.

This is not an exaggerated fact. Many a time, investors are left on the lurch and do not seem to comprehend the intricacies of the investing world. From how interest rates affect the markets and also establishing a separation between economies and markets.

The last recession stems the fact that our citizens struggle when making complex financial decisions that are critical to their well-being. Some of our economic problems were created by bad actors going for personal gain. The consequences for these affects the layman on the streets who just want to be informed and explained in the simplest of ways.

Have we yet to learn anything from the last recession?

When euphoria encapsulates us and getting access to easy credit dictates how we use our money, we tend to delay financial literacy. Worst, we don't even bother. Schools, in my opinion have a certain responsibility in educating students on personal finance. Most of the graduates in Singapore enter the working world falling prey to improper advice from their own financial advisors. Our society has to stop putting a blame on getting bad advice. The public needs to be well informed on popular subject matters in finance such as Insurance,Unit Trusts,Stocks and also Structured Deposits. A wise man once said "Free advice is usually bad advice".

As our society is still evolving, financial literacy needs to be taught in schools. If not, we will find ourselves paying dubious amounts of money for a three-day course, over a weekend, just to learn the basics of financial instruments.

Food for thought.