There are two types of people in this world: clueless consumers and sparing savers. In the wake of the global financial crisis, however, many lifestyles took a drastic turning point in terms of personal finance. The desire to run into the arms of frugality came naturally for individuals as they dumped their precious investments and gave up major living necessities. Even the upper-class toned down their spending. And what happens when customers refrain from buying their daily coffee and families stop going on yearly vacations to the Bahamas? The economy suffers. The collapse of the infamous investment bank, Lehman Brothers, led to a greater awakening for the need for “financial literacy” in the global economy.

Consider this question: if you could sacrifice one of your most valuable assets for the sake of becoming wealthy, what would it be? You may sacrifice numerous things to be wealthy, but you would not sacrifice your time. Some of you may fail to realize that there are no shortcuts to wealth, and so you refuse to put in the time it takes to build it. Some of you may make excuses along the lines of “not having access to proper education” or, even worse, “not having enough money to be successful”. However, you could not be more wrong – it does not take money or even a formal education to become financially empowered. Although, what it does take is time, dedication, discipline, and most importantly, the desire to develop your financial literacy skills.

Understanding financial literacy at its simplest form is relatively easy – spend less and save more! As this may be deemed too simple, it is your lifestyle and mindset that make it seem so difficult. But what if I told you that financial illiteracy is one of the root causes of poverty and stress in our society? What if I told you that financial literacy is directly correlated with happiness? Enhancing our understanding of personal finance is not only vital to our financial well-being, but also to the prosperity of the economy. In the twenty-first century, managing our personal finances is quite challenging given the complexities of the financial system. Nonetheless, rather than running away from the realities of your financial exhaustion, it is your responsibility to become more financially articulate and to work hard for your everlasting financial freedom.

Are you going to become the victim of your financial turmoil or the hero of your story?

In the article Financial Literacy: Getting Beyond the Markets, economist Jim Stanford states that:

The discourse of financial literacy locates the root cause of Canadians’ financial distress in individual actions, choices, and failings: not saving enough, not planning ahead, not reading the fine print on those risky investments. It assumes that financial education alone (rather than a more concrete change in the real circumstances of Canadians’ economic lives) will be enough to change those outcomes. It endorses the current practices and culture of personal investing, and in fact stresses that we need more of it. Most dangerously, it begins to create a context in which governments can shrug off their responsibilities (whether that be regulating financial industries or providing for basic income security for Canadians of all ages) by establishing the expectation that Canadians should be able “to look after their own best interests”…The reason more Canadian households are in financial distress is not because of their individual behaviour and choices. It is because our economy, and our society, have evolved in ways that have resulted in greater inequality, greater insecurity, and greater hardship for many (not all) Canadians.”

At the end of the day, financial literacy should not be a matter of simply learning and understanding the financial industry, but rather focusing on how we can improve the economy’s financial position. If every individual were to improve and stabilize their personal finance, the overall financial system would become stronger.

I believe that we are all capable of fostering financial change, and as the respectable Benjamin Franklin says,

“Waste neither time nor money, but make the best use of both. Without industry and frugality nothing will do, and with them everything.”

Writer: Mariam Walaa

Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.