I just picked up this course on Coursera about economics of money and banking and one of the statements made by the instructing professor caught my attention. He said, “Learning about finance basically implies that you can translate any article from the Financial Times to simple English and explain it to your room-mate”. Well, there is no need to contemplate the extent of understanding required to achieve this objective because, we do not really require it!
However, that being said, the importance of knowing about financial system including banking, taxation, government policies, national budget etc cannot be ignored. The simple reason that it’s important is because somewhere, it affects you. Additionally, I presume that any soul would be interested in taking the pain of learning about something when it affects them some way or other
At this point, I am reminded of a highly credible point made by Bruce Wayne in the movie Batman Begins, that is all-pervasive:
“People need dramatic examples to shake them out of apathy”
Something similar happened when people realized the significance of financial literacy after the sub-prime crisis in 2008 that shocked the entire World. Investors in many countries were doomed to know of these events and found themselves amidst complex mortgages, the risks of which they did not fully comprehend. As per reports, the lesser financially literate people were the big victims of colossal foreclosure notices.
There, you see the need of financial education! Though this might sound made-up but I have actually met people paying almost 10K extra in taxes that could have been easily dodged. What a waste of money!
I would not stretch this piece any further because I believe you have understood the gigantic significance of learning about personal finance.
To sum it up, let me borrow (yes, again) a few lines from an article in the Economist:
“EVERYBODY wants it. Nobody understands it. Money is the great taboo. People just won’t talk about it. And that is what leads you to sub-prime. Take the greed and the financial misrepresentation out of it, and the root of this crisis is massive levels of financial illiteracy.”
Now, if you have grown a bit of yearning to start learning (I am happily assuming that you might have been somewhat inspired by this article) then this is a good resource:
The Blessed remark: Any claim made above is not fallacious. It is backed by genuine data.