Tech & Financial Literacy

In 2014, Standard & Poor's Global FinLit Survey calculated financial literacy by measuring knowledge of risk diversification, inflation, numeracy and interest compounding. The result? Only 33% of adults worldwide were classed as financially literate. “Financial knowledge is especially important in times where increasingly complex financial products are easily available to a wide range of the population,” write survey authors Leora Klapper, Annamaria Lusardi and Peter van Oudheusden. They also explain the high costs of financial ignorance. A low level of financial literacy directly translates into spending more on transaction fees, incurring more debt, paying higher interest rates on loans, borrowing more and saving less.
So what can be done to improve financial literacy? Let’s consider three tech solutions.

Financial Literacy in the Classroom
Many students graduate from secondary school without ever having taken a business course. If financial literacy is taught in schools, young adults are much more likely to understand how to budget their income or even balance the books if they become entrepreneurs. By allocating a couple hours a week for students to explore financial literacy websites, schools can teach these real life skills. Let’s consider one website: Coffee Shop Game. In this small business simulation, players set up a coffee shop with the objective of making as much money as they can in fourteen days. Students must buy ingredients wisely, select popular recipes and set product prices. As the game progresses, players can see whether they’ve made good financial decisions and gradually nurture the skills needed to be financially savvy adults.

Online Resources for Adults
There are so many online financial literacy resources for adults; perhaps the biggest challenge can be deciding which tools are best. My advice would be to seek out unbiased, well-known resources that summarise the fundamentals of financial literacy such as the well-known For Dummies financial literacy guide or Money Crashers. If you already know the fundamentals, you can follow blogs or podcasts that will expand your knowledge. Trusted websites such as Forbes regularly publish lists of the best financial literacy tools. For example, The Simple Dollar is a Forbes-recommended blog that offers advice on credit cards, loans, insurance, banking and investing. We’ve also built a great resource here that covers everything from saving for the future, to investing and even tips on how to recover after job loss.

Money Management Apps
Often, the first step to financial literacy is understanding how you spend your money. After all, you can only set and achieve goals if you have a realistic idea of your finances. Free apps such as Wally and Spending Tracker make tracking income and expenditure quick and intuitive; Wally even allows users to take pictures of receipts instead of manually having to enter costs. Money management apps make it simpler to stick to a budget and also allow users to identify any spending issues; even seemingly small daily expenses can add up to a significant amount. For example, spending twenty dollars on a cup of coffee before work may seem like a small expense until you realise that by the end of the year you would have spent approximately $5,220 on coffee. A money management app can help you spot those little expenses that really add up.

Financial literacy affects all aspects of life – from investing to mortgage payments to retirement savings. We’re fortunate that modern technology offers the tools to improve our financial literacy and, with that, the quality of our lives. So why not make a personal commitment to improve your financial literacy today?

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