Yes, being academically literate and being financially literate are both totally different stuff. You may be an MBA degree holder from top shot campus and someone in your circle would hardly be a schools passout but it doesn’t guarantee you a secure and stress less life if you are not able to manage your inflow of money.
Planning is a probably the most the important thing one should do in first place. Whether it is about your education, your career, your daily routines, your marriage or even your weekend! At least one should have a rough idea about how you wants to lead your life. And MONEY is something which grabs everyone’s attention whenever mentioned (or even without getting mentioned!) which is fair also because you can’t turn your face and say that ‘Money is not everything’. To say such sentence, you must have lot of money in your bank account!
Okay now, so what I mean by being financially literate? It is about taking charge of your money and using it in most efficient way. You would have heard ‘A money saved is a money earned’. How true it is. We all earn and spend money but have you given it a thought that how your little planning can prove a blessing to you in the future. Saving is so crucial part of our life and the problem is very few do it even after knowing this. The question that can arise is ‘Howmuch money should we save?’ The answer is ‘All the money that you don’t need in nearby future!’ (Nearby future can be 1 month , 1 year or even 50 years!) So basically you must save your money.
Now the next question ‘How can we be financially literate?’ The answer is right infront of you, your cellphone or your laptop whatever you are using right now can give you financial literacy. Google it, Youtube it. Talk with your friends, family members.
You can save your money by putting it in Banks, investing in PPF, mutual funds, stocks, gold etc. But the first step is to start it. Later on you can make changes in your saving habits as per your knowledge and risk taking capacity. It is good to start as early as you can to reap the benefits later on. The concept of piggy bank is nothing but lesson for all of us that saving should begin from very young age.
I have personally seen people doing great in their careers but they don’t have much financial back up in case if something happens to him (the soul earning member of family). Life cover is must but you must not skip saving part to lead a comfortable life after retirement. Now a days there is a new concept called ‘Early retirement’. People working in corporates have started taking early retirement in order to spend more time with family and friends. This is only possible if you have some done really good savings and investing. Yes there is a difference between saving and investing! If you put 1,00,000 in your bank account for 1 year, you will get an interest of 27 rupee per month (4% interest rate) and if the same amount in invested in Mutual fund throught the year (8333 rupee per month for 12 month), at the end of the year you will get a gain of 4441 (which is 370 rupee per month) (Assumed rate of return is 8%). I hope now you get the difference!
I can write pages on this topic but it all will be void if you don’t practice it yourself. So for those of who haven’t started saving or investing yet, start it ASAP and those who are already doing it, Pat on Back!!