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Individual design and analytical task
Performed by Demchenko Anastasia
1 question
Give your own (author’s) definition of “financial literacy of the population.” How does it relate to the concept of “financial culture of the population”? What is the relationship between the concepts of “financial literacy” and “legal literacy”?
By financial literacy I mean knowledge of key financial concepts, possession of information about financial institutions and the products they offer, the ability to use it and make smart decisions to achieve life goals. It is also the ability to ensure one’s own well-being, the ability to keep records of all expenses and income, the ability to search for information in the banking services market, and competently compare the offers of financial enterprises with each other. A financially literate person must understand the tax system (the rule for calculating taxes on an individual).
Financial literacy and financial culture, in my opinion, are closely related concepts. Because: financial culture assumes that reasonable people plan their lives in advance. They set priorities and goals in all areas of life in advance, using the laws of money and certain financial instruments. Financial culture, in my opinion, is the competent management of finances. That is, the ability to manage one’s personal finances and financial literacy in this area undoubtedly helps people.
The relationship between the concepts of financial literacy and legal literacy can be traced quite transparently. These concepts imply that it is impossible to improve literacy in a narrow area of financial issues without a concomitant increase in legal literacy. As studies show (sociological surveys of the population), the majority of residents of the Russian Federation do not know the laws and do not have the skills to use the laws that directly affect the life of every person.
2. Question
What criteria can be used to comprehensively assess the level of financial literacy of an individual (the population as a whole)? Along with the existing indicators (criteria) of financial literacy, which ones would be advisable to add?
In my opinion, firstly, the level of financial literacy can be assessed by the level of knowledge in financial accounting. It can also be assessed by the content of the issues that are raised in citizens’ appeals to the state. The second criterion is the number of citizens who have started using the services of financial institutions and banks. The third criterion is a reduction in the number of citizens affected by financial pyramids that periodically arise in Russia.
NAFI conducted a study in the field of financial literacy, and they identified these components:
1) attitudes, responsible for creating an individual’s need for financial services and providing an understanding of the consequences of their actions
2) knowledge about financial institutions and the products they offer, about the basic concepts of economics and the financial market in particular.
3) skills to use them.
Speaking about literacy levels, it is impossible not to touch upon the statistics of today. I gave the example of a VTsIOM survey. "More than half of the respondents (57%) are not afraid of losing their savings stored in banks. Every third respondent (38%), on the contrary, expressed concern about the possible loss of bank deposits. Citizens with primary education are most often afraid of losing their savings (48% ) and low income (48%), as well as communist supporters (50%).The results of this year's survey are comparable to the data of previous years.
The majority of our fellow citizens (63%) do not consider it necessary to take any action to preserve their deposits. Russians took a more active position during the onset of the global economic crisis (in October 2008, the share of respondents who gave a similar answer was only 48%).
Those surveyed who take certain measures primarily monitor the work of the bank (8%), keep money in a state bank or make deposits in several banks (5%), withdraw money from accounts or keep small amounts (4%). A small portion of respondents insure bank deposits (3%), invest money in real estate or purchase durable items (2% each). Another 2% of respondents are convinced that they have already chosen a reliable bank for storing deposits."
It is noticeable that the percentage of “active” citizens is the lowest. The conclusion is that if a larger percentage of people were financially literate, then the statistics would be different. financial expense income
In my opinion, it is necessary to add a psychological factor, an individual one, to the indicators. All attempts to increase the level of financial literacy will be useless if they do not take into account the psychology of a person at a certain age.
3. What problems have you identified in assessing the level of financial literacy of the population? What factors interfere with an objective assessment of the level of financial literacy?
In my opinion, the problems in financial literacy are quite significant. For example, this is the fragmented nature of ways to increase it. There is no clear scheme for work. Each region of Russia has its own methods and methods. Secondly, a system of indicators characterizing the level of financial literacy and financial behavior of the population has not been developed. Thirdly, the most vulnerable points of the population have not been identified. The next problem may be an undeveloped monitoring system that allows tracking changes in the level of financial literacy and financial education of the population, both during the implementation of various programs and upon their completion.
It seems to me that the main factor preventing an objective assessment of the level of literacy is that people answering questionnaires on the level of financial literacy cannot objectively assess themselves, so there is always subjectivity.
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I decided to write another article on a very relevant topic, which, unfortunately, few people think about - financial culture. What it is, what it includes, what problems are most pressing in this area today, what everyone needs to know in order to be financially cultured, and how it can help in life - all this in today’s publication. I hope it will be interesting and instructive.
So, what is financial culture in my understanding? I always recommend interpreting unclear terms that contain more than one clear word by first looking at each word separately and then putting them together.
We go to the dictionaries and see that culture is upbringing, education, development, accumulation and application of skills and abilities in various spheres of human life, and finance is money in motion. Thus, the following definition can be formulated:
Financial culture is the education, development, accumulation and practical application of skills and abilities in handling personal cash flows.
How are we doing with this? Unfortunately, it's bad. For the vast majority of the population, financial culture is at a very low level, and this statement can be applied even to people who are cultured and educated in other areas of life.
Let's look at this question in more detail: what specific skills and abilities in handling personal finances do you need to develop in yourself? That is, what should a person’s financial culture include?
In my opinion, there are 4 main directions here:
1. Skills and abilities to make money;
2. Skills and abilities to spend money wisely;
3. Skills and abilities of accumulating and saving money;
4. Skills and abilities to increase money.
And for each of these areas, the financial culture of our people leaves much to be desired. Moreover, I arranged them in descending order of this very financial culture. That is, people know best how to make money (I emphasize: not better in absolute terms, but better in comparison with other areas). Things are a little worse with wise spending of money. Even worse is their accumulation and preservation. Well, only a few out of tens and hundreds of thousands of people have the skills to increase money.
As you know, the vast majority of our people constantly experience financial problems; in simple terms, they live in poverty. If you ask them why this is happening, they will probably start complaining about the state, which “does not care” about them, about the lack of work, about low salaries and pensions, about high prices, etc. At the same time, no one will say that the reason for his deplorable financial condition is the low level of his own financial culture and financial literacy.
Of course, it’s always easier to look for the reasons for your troubles somewhere around, but not in yourself. I’ll say more – there really are these reasons around! And there are many of them. And it is virtually impossible to fight them. Well, there is no way a person will be able to resist rising prices if there are objective economic reasons for this. Therefore, there is only one way out of a disastrous financial situation, which everyone can do - this is the development of their financial culture: acquiring and applying in practice the skills and abilities of personal finance management. Unfortunately, almost no one even thinks about this, so I’ll once again focus on this point.
Financial culture of making money.
Most people believe that in order to earn money, you need to go to work. To earn a lot, you need to either move up the career ladder. This is a very superficial idea of earnings.
Firstly, you need to know that there are, and in each of them there are many diverse areas for earning money, of which traditional work in most cases is, frankly, not the most successful. Secondly, you need to understand that the methods of earning money generally differ in nature, based on what resources a person uses to generate income (more about this in the article). And thirdly, it is important to know that the only source of income, no matter how reliable it may seem, is always very dangerous. After all, if it suddenly disappears, income to the personal or family budget will stop, and then what will you live on? Moreover, such a source as wages certainly cannot be considered reliable. Therefore, it is imperative to diversify your income: the more sources of income you have, the better, but it definitely should not be just one source.
Financial culture of spending money.
If in the area of income a certain percentage of people still look for and find alternative options for earning money, then with expenses things are worse. That is, our people do not know how to spend money wisely.
Judge for yourself: everyone complains about the constant lack of money, yet they have the latest model smartphones and iPhones. In many cases - purchased on credit. Using this simple example, I want to show that most people cannot competently identify those areas of spending money that they really need and, as they say, “affordable.”
And things are also bad with the necessary areas of spending: people do not know where and, without even understanding the real meaning of the word “saving”, associating it with greed. They think with stereotypes imposed by someone that “there are things you can’t save on” and justify their financial hole with this.
The financial culture of spending a personal budget is simply perfectly described in the well-known hit by Semyon Slepakov:
I receive 9,000 rubles, which lasts me 30 days,
And if there are more days in a month, I borrow 300 rubles,
And if there are fewer days in a month, I save 300 rubles,
Comments (0) | 01/18/2017 21:17
In our country, only a small part of the population observes the rules of good manners in various areas. The same can be said about residents of other countries. But in all countries there are even fewer people who follow the rules of good manners in the field of personal finance, i.e. financial etiquette. But the financial sphere is one of the most important areas in human life, and in it, just like in other areas, its own rules apply, by compliance or non-compliance with which one can judge the financial culture of each person. It is possible that you have encountered this lack of culture more than once, and perhaps you yourself have behaved very unculturedly. Our lack of culture manifests itself quite simply, it can be judged by seemingly innocent questions: how much do you earn, did you buy a car on credit ( credits), can you get by without a loan until payday, and. etc.
In order for financial culture to improve, it is necessary to follow several rules of good manners in the financial sector.
First rule. You shouldn't ask anyone about money.
Income, expenses, i.e. a person’s financial condition is his personal business, and there is no need to try in every possible way to find out about it. Maybe you yourself also experienced unpleasant sensations when someone you knew wanted to invade your financial sphere. Exactly the same unpleasant sensations may arise in the person you are asking. Therefore, from communicating with other people, completely exclude the following questions:
- How much is your car worth?
- How much do you earn?
- How many loans do you have?
- How much money does your family spend?
- And so on.
Second rule. You don't have to show how much money you have.
In our lives, there are also people who behave opposite to those described above; they do not wait for you to ask them a question about their financial condition, they themselves begin to clearly demonstrate it and exaggerate it. These people very often buy branded items on credit and brag about them, but unfortunately this has nothing to do with the financial solvency that they so want to demonstrate. These people really want to be noticed, but by their behavior they only demonstrate their financial illiteracy and adherence to the stereotypes of the consumer society. Our advice to you is to be smarter, live within your means and adhere to financial culture.
Third rule. You should not give financial advice unless asked to do so.
If you want to be a financially educated person, then do not advise other people what to do with their money unless they ask you to.
- In order to get a good interest rate, you need to invest your money in...
- There is a sale in the store around the corner, a lot of cheap goods, you need to buy.
- And so on.
Fourth rule. You should not ask to borrow money.
If the country has a difficult financial situation, then there are more and more people who borrow money, but this only indicates their financial illiteracy.
· Such people accumulate loans and do not know how to pay them off.
- They buy non-essential items that they don’t have enough money for.
- They like to borrow money in order to “hold out” until their salary.
- They borrow money, but don’t think about how they will pay it back.
Fifth rule. You must agree on a budget when spending together.
If a man invites a woman, for example, to a restaurant, then by default it is assumed that all expenses are paid by the man, but if a man plans to divide the expenses by gender, then he must initially inform the woman, that is, agree on the budget with her, otherwise a situation may arise. an unforeseen situation that could end in such an unpleasant thing as quick loan, and this will in no way indicate your financial literacy and culture.
Due to ignorance in the field of economics and money, people are often unable to provide themselves with a decent life, even with a good salary. In addition, other people often take advantage of our financial illiteracy, which leads to dire consequences. It is for these two reasons that it is worth learning the basics of financial literacy. As you will see later, the ability to earn a lot does not mean a comfortable life. If a person earns money only with the help of certain skills (music, medical education), then this is not enough. The ability to manage the money you earn requires completely new skills and knowledge - and this is what can lead you to financial independence.
We are not taught how to manage personal money at school or even at university - and this is the biggest omission both for any state and for you and me. We come across money issues several times a day and at the same time we do not understand at all what money is and how to become a financially wealthy person. Moreover, if you ask almost any person what a financially wealthy person is, the answer will be the same: “The one who has a car and a good house.” In our course, you will understand that this is an incorrect definition of a wealthy person for many reasons and you will learn what kind of thinking you need to develop in yourself in order to achieve a stable financial position after a few years or at least acquire some habits that will help you save wisely and not throw money away .
What is financial literacy?
This is not a very simple question, because different people understand it differently, and this concept itself is rather philosophical and purely subjective. But if we still try to give direction to our course, then we can say that:
Financial literacy is a clear understanding of how money works, how to earn it and manage it. There are two main characteristics of a financially literate person. First: his expenses never exceed his income. Second: any positive difference between monthly income and expenses is used in investments of any form.
Surely you know many people who have been earning quite good money for several years and yet are barely making ends meet. They are great at what they do - it could be programming, art, science, . However, some of them even manage to get into debt. And it would be nice if they bought themselves important things with which they... Typically, these products are completely pointless and purchasing them becomes burdensome.
This may seem strange, but in fact it doesn't matter how much you earn at the moment. In the history of mankind there are thousands of stories about how a completely poor person became a millionaire. There are also reverse stories - people who were hit with wealth managed to lose everything in a short time. Therefore, it is very important to understand that your current income is not a death sentence. This is precisely why financial literacy is needed. It shows how, by acquiring some financial habits, anyone can climb out of a financial hole and get back on their feet.
Economics is a difficult tool to understand. This is evidenced by financial crises, when even the best economists in the world were not able to predict things that now seem obvious. Now economists use the phrase about cycles, abdicating responsibility: “There are cycles, there will always be world crises.” No one can predict the exact date of the crisis, but everyone can prepare for them.
Can a millionaire be financially illiterate? Maybe. For example, this is a Hollywood actor who can receive several million dollars for one role. After some time, his fame fades, and along with it his financial fortune disappears. Therefore, he is forced to spend the rest of his life playing low-paying roles, selling off his property in order to make ends meet. This is a perfect illustration of the importance of financial literacy.
Application of financial literacy in life
Studying the theory, cultivating a conscious attitude towards money and financial thinking - these three things will help any person get settled in life.
Financial thinking is most important, but it is very important to constantly learn and supplement knowledge with practical skills. Some people believe that you need to work as hard as possible to become financially secure. On the one hand, this is true, but on the other hand, you must first of all work wisely. Once you start your financial journey, you are forced to work as hard as possible. But there is one important point: the more money you have, the more intelligently you should approach your work. There is no point in becoming rich and working your ass off. A financially literate person, as his capital increases, works less and at the same time accomplishes more. For example, once you reach the point of becoming an investor, you can work less. Money will work for you. Of course, in this case, no one forbids you to do what you love and continue to work, but now you will decide for yourself how much and where.
Remember that you can apply financial knowledge now. Everything you do with your finances today affects your future. When you stop buying things you don't need, you have new opportunities. A simple thought begins to form in your mind: money should make new money. Simply spending your income gives immediate results and does not move you forward in any way.
Any book about financial independence will first of all make you understand the importance of optimizing expenses in your life. Spending everything you earn is the worst strategy, worse than living on credit.
Our course will help you change your life and attitude towards money. You will learn to think in terms of decades. In any area of life, satisfying immediate desires does not lead to anything good. In the financial sphere, this can lead to the most catastrophic consequences. The financial literacy course is designed to change your thinking and help you become a more mature and human person.
How to learn financial literacy?
No one is born financially literate. You can be born into a rich family, but this does not guarantee you a wonderful financial future.
To develop financial thinking in yourself, you need to devote many months to this. However, you can develop many positive changes in yourself within a few days. The theory of money can be learned fairly quickly, and you can also understand how the stock market or bank works. And only by understanding how finance works will you begin to move forward little by little.
In past times, financial literacy was even worse. Man was forced to work from morning to night in order to at least survive. Financial culture existed in its infancy. To become a wealthy person, you had to use force. Nowadays, a lot has changed and this is a great chance for each of us to succeed in life. There is a lot of freely available materials: books, courses and videos. Any information is available here and now. However, as we know, the availability of information at the same time depreciates it. You must clearly understand that you already have everything you need for financial prosperity, you just need to find the right materials.
Perhaps the most important skill for developing financial literacy is. More than 90% of people in the world spend money completely thoughtlessly and it is for this reason that none of them will become a wealthy person. Nobody guarantees anything to the remaining 10%, but they still have more chances. By developing discipline around your financial habits, you increase your chances a thousandfold of being retired in ten years, having passive sources of income, and doing whatever you want.
Want to test your knowledge?
If you want to test your theoretical knowledge on the topic of the course and understand how suitable it is for you, you can take our test. For each question, only 1 option can be correct. After you select one of the options, the system automatically moves on to the next question.
Lessons on financial literacy
Having studied a large amount of literature and biographies of rich and successful people, we came to the conclusion that financial literacy is a skill. Any skill can be learned. We have developed six lessons for you, each of which will cover a specific aspect of financial literacy. The good news is that we didn't have to target different types of people because financial literacy is not unique to every financially successful person. This is a certain set of knowledge and simple skills that everyone can acquire. All great businessmen had approximately the same philosophy, only the ways to achieve the goal differed.
Purpose of the course: to introduce our reader to planning, financial analysis and investing.
Course Objective: develop financial thinking in the reader, which is not taught at school and university.
We present you with a short overview of each of the lessons.
How to take classes?
At times this course may not seem very easy, but we tried to mix simple and difficult things. Economics is somewhat complex, but once you get to know it better, you will understand that it has its own completely understandable laws. There are also completely illogical things in it, but you will understand this and do everything to be prepared for the unexpected.
The first, third and fifth lessons are more related to theory than practice. You can choose this order of study. The theory will require the least amount of time. The second, fourth and sixth lessons are mostly practice and require more time to study and implement. However, you can study the lessons in order. The symbiosis of theory and practice is the right approach and any professional knows about this. You can think a lot and not act, or you can act thoughtlessly and make a lot of mistakes. When you think and act, you get the best results.
You can complete our course in two ways, related to time periods. For example, if you have time, a week may well be enough for you. However, we recommend that you take the course more thoughtfully and return to it from time to time. Once you've completed the course, come back and reinforce your skills, review the recommended reading list, and move on. However, our course is self-sufficient in itself and will help open your eyes to many things. We tried to make it fun and easy to understand.
No one can argue with the fact that financial culture in our modern world has become a kind of connecting link between the rules of behavior and the system of our habits and skills. Commodity-money relations almost always become a priority in relationships. And therefore, it is clear that a financially literate person will be more independent, will not depend on various circumstances and on the will of strangers, but will be able to choose his own path along which he will walk throughout his life. After all, if you need to make an intelligent decision related to money and reduce financial risks, then you simply cannot do without financial literacy, which Kiyosaki reminds you of more than once in his books. At the same time, a low level of financial culture can lead to various problems, ranging from social problems to bankruptcy and financial traps.
It is also necessary to understand that today the very concept of “financial culture” absolutely goes beyond all boundaries - socio-economic, political, and geographical. Having financial literacy, every young person will be able to intelligently manage and dispose of money, rationally plan their future and thus create a material basis for the development of our society in the future. Briefly described, financial culture is a certain number of specific (directly related to money) skills and abilities that a person acquires during his school and student years, but which are then tested over many years of life. The development of financial literacy in society depends on working financial institutions. Unfortunately, not everyone can now pay for their education and, accordingly, receive a diploma, but financial literacy must still be achieved, at least through certain courses. As a rule, such courses last several months and teach the basic laws of the market. The main goal of financial education for young people remains primarily high-quality and understandable information.
One of the ways in the field of education is close cooperation with the media. In order to draw attention to the most pressing topics of the financial market and be interesting for all segments of the population, interesting articles, comments, and professional interviews began to appear in print publications and in the media. Public events such as thematic forums, round tables, and seminars have also proven themselves to be excellent. And they, naturally, are aimed at completely different target audiences. The main ones are students, pensioners, schoolchildren, and ordinary working people. Meetings conducted in this open manner can provide answers to serious questions of interest to the public. Naturally, all this has a positive effect. After all, financial literacy is necessary for a person at any age. The younger generation will be able to plan a budget and grow financially, pensioners will be able to correctly calculate the funds they have accumulated over their lives, and accordingly, middle-aged people will be able to make good savings for their old age.
However, we should not forget that financial culture is directly and very closely related to the state. After all, it is the state that introduces legal norms that must be observed and which cannot be changed. The state should be concerned about the financial education of its citizens. This concern can be explained simply: if economic knowledge is present, there will be a correspondingly high level of economic growth. That is why financiers, economists, and businessmen who are involved in the development and implementation of new modern ideas in the financial services market must delve into the topic of developing financial literacy among the common population. In some countries, special educational programs operate at the state level.
To sum it up, I would like to say that you can and should acquire and improve financial knowledge and skills throughout your life.
