Financial Literacy: How important is it in the Digital World?
In every aspect of our life, there is a saying quoted by Benjamin Franklin which goes “An Investment in Knowledge Pays the Best Interest” that always relates especially in Finance. The World of Finance might look simple from the outside but with an estimated 9.25% of people living below the basic poverty line, Financial Literacy has become a topic that is more important than ever. So what is Financial Literacy? and how significant is it in the continually digitalized world?
Financial Literacy….
The world as we know continues to evolve from the time Barter was introduced as a means of exchange to the current times where payment can be made at the grasp of your smartphone. The way we consume information has also changed from reading the newspaper in the early 19th century to the rise of the internet where information is readily available. But yet with all these advancements the topic of Finance is rarely discussed at our young age and at school.
Studies done by Standard & Poor’s suggest that on average 55% of adults within major advanced economies and 28% of adults in major emerging economies are Financially Literate which leaves a huge gap of people that are not Financially Versed. Going back to the definition of Financial Literacy, it is the ability to understand and effectively use various financial skills, including personal financial management, budgeting along with investing for Long Term Sustainability and Wealth.
Financial Literacy means gaining knowledge and understanding the financial products that are available in order to make a better financial decision that will align with your long term goals. Since everything in this world requires Money, Financial Literacy may dictate the decision you make with the money you have and if you know how to utilize this money correctly on the right financial product, it may lead to long term wealth.
Being Financially Literate isn’t about earning money and saving it but also knowing how to pick various investment instruments to grow your savings. Of Course the scope of Financial Literacy will be different for everyone and depend on several factors, such as your age, investment time horizon, and risk tolerance but one thing is for certain that you need to continue expanding your knowledge on Financial Service and its implications for your daily lives.
Why does this matter? Financial Literacy has never been more important in today’s age where Complex Financial Products are now available to a wide range of population. Products such as ETFs, Bonds or Cryptocurrencies are now available to everyday investors through plenty of platforms but it takes knowledge and research to utilize these products in the right way. For example choosing Bitcoin due to its sustainability instead of the ever popular Memecoins.
The tragic culture of “FOMO” or Fear of Missing Out also has led to many of the Younger Generations going into debt for the wrong decisions. The rise of Loan Platforms providing easy access to credit has led to Millenials and Gen Z being highly in debt at a young age. FInancial Literacy helps you to navigate the financial ecosystem to help diversify your investment portfolio and preserve the money you make on a daily basis.
How to be more Financially Literate? In the current age we live in today, information has never been easier to find and it is important that we keep up to date with the latest happenings in the world. You can begin by listening to Podcasts on Finance or Reading Financial Books to help strengthen your knowledge on the financial ecosystem. Also keep yourself up — to date with the news on the economy and regulations as this will help navigate your decision making process.
Once you are well — equipped with knowledge, it’s important to first track how much money or income you make on a daily basis as this will help in knowing how much resources you have to work with. Then keep a budget on your spending as we all will have daily expenses and invest the difference on various instruments to gain you more in return. Also keep track of inflation and interest rate levels as this can be an important indicator in your choice for the right instrument.
The main challenge in doing all this will be beating your desires to spend as we all have wants that feels great when it’s granted and instead focus on the long term financial goals. Consuming too much information may also lead to false sense of security and may result in individuals forging strategies that are not aligned to their own personal goals, this is why it’s always important to stick with the strategies that relate to your well — being in the future.
Aligning your Goals and Deepening your knowledge on the Financial Ecosystem will in itself bring you much more advantage in savings cost and provide long term return if you tap into the right instrument. Say you chose Bitcoin or Ethereum in 2015 and your portfolio will have grown over 1000% in just over a decade but it obviously takes financial literacy to spot this opportunity. Over the years its main benefit will be identifying what your financial needs and wants are while disciplining yourself for the future.
With all these in mind, Financial Literacy can have a direct impact on the Well Being of all people and its significance can grow for generations. A Financially sound decision can provide a boost in Net Worth for not only you but also your ancestors down the line, that is why its always to continue and expand your knowledge within the financial ecosystem. As we approach a New Digital World, it is never too late to do your research and learn!
Transitioning to the Digital Age
The Slow and Steady shift towards Digitization has reshaped not only how we interact with our finance but also the financial product that is available. We are now exposed to thousands of courses and millions of influencers who are ready to provide you with financial information and this is why it’s never been easier to be financially literate. With all of this information it is then vital to pick and choose which one aligns with your long term financial prosperity.
Entering the Digital Age, financial products also are changing from the ordinary Spot Market to the growing popularity of ETFs, from the traditional commodities like Gold and Silver to the ever growing DeFI Space. As Financial Products get more complex towards the general audience and the excessive availability of data, everyone of us should take their time to do our research before the fear of missing out leads us astray.
Many innovations have been brought up in the financial landscape to help investors be more aware of the products they are involved in. The rise of Robo Advisers is an example of how Artificial Intelligence can be implemented to help the general audience with information and even manage their portfolio in the long run but at the end the best decision and knowledge always lie in all of us who are capable of making rational judgement.
Just as the world continues to evolve as the years go by, Financial Literacy also continues to evolve to not only be a mere knowledge but a way of life. Financial Literacy is an integral part of all our life decisions and it is essential that we keep on building on our capabilities as we transition to a new era of Artificial Intelligence. If there is anything that can be summed up about financial literacy is to always develop a habit to learn and keep the long term goals in mind!
We in Nagaya Technologies Pte. Ltd believe that education is an important part of every HODLers journey within the DeFI Space. That is why we encourage everyone to Do Their Own Research before committing themself to any project. Nagaya is the world’s first hybrid digital asset that is partially backed by Real World Asset to protect its intrinsic value and allow it to grow sustainably over time. To learn more on the latest information on Nagaya and our whitepaper, you can always visit us at www.nagaya.co
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