FreJobsAlert.com –Financial Literacy Is An Important Ability for Business Owners. Business owners will always deal with budgets and finances. Therefore, the employer must be an expert in managing finances and possible. One way is to apply for and master financial education. Financial education is a must-have capacity for business owners like captains. What is financial education like? The next complete look!
What is financial education?
Financial education is the knowledge, skills, and capacities of people who are financially related to being able to make maximum use of finances. Financial Education or the Financial Education Act as capable education of the public, especially for those who own businesses, to make decisions related to their commercial finances.
Meanwhile, according to OJK, financial education is the existence, science and belief that have an impact on people’s behavior as a way to improve the quality of financial management and decision making, with the aim of achieving a prosperous life. In addition, there are also several opinions of economists, such as Manurung and Mitchell.
According to experts, financial education is a way to measure how skillfully people use all the financial resources at their disposal. This capacity is also evaluated by how well people plan finances, make decisions, accumulate finances, calculate debt, pension funds, etc.
However, in reality, indicators for financial education cannot be made by Pakem because each financial service has its own indicators to evaluate each individual’s ability. In the end, this competition becomes a basic economic education that must be dominated by all levels of society.
Examples of financial education have several ways. For example, the types of savings they have are diverse, actively participate in the financial sector, are aware of saving or investing early and are able to take advantage of debt for productive activities. The debt isn’t always bad, is it, brother. If the employer can manage debt, the employer may find it useful and may be more productive.
In addition, there are several levels of financial education based on a survey conducted by OJK in 2013. In general, there are four levels of financial education that show how well a person is at mastering financial education.
1. Well literate
At the literacy level, which means that the captain is considered to have the knowledge, competence, and confidence associated with financial service institutions. As many as 21.84% of Indonesians are included in the level of literacy in the well. In general, people at this stage are also familiar with financial products and services.
In short, the well literacy stage is the best level because it is definitely understood in terms of the characteristics, benefits, risks, rights and authorities associated with financial products and services. People at this stage have also dominated the skills to use these financial products and services for their interests.
2. Sufficient literate
Adequate literacy rate is a good level although it is still below good literacy level. This level is the highest in Indonesia, which is 75.69%. At this level, people already have knowledge and beliefs related to financial service institutions and their products. The characteristics, benefits, risks, rights and obligations have also been cited by people who are at this level, but who still do not have the skills to use these financial products and services.
3. Less literate
Under sufficient literacy, there is a level of people who are less literate, namely that they have knowledge related to financial institutions, products and services. Only limited to that, people who are at this level only know financial education material. This level is not so in percentage, which is only 2.06% of the community.
4. Not literate
Finally, the lowest level is not literate, which is a group of people who are considered to have no competence related to financial education. People at this level lack the knowledge and trust in their financial institutions and service products. Those belonging to this last tier, who make up 0.41% of people in Indonesia, do not have the skills to use financial products and services.
Why is financial literacy important?
Financial literacy is something that the government really strives for. Why is that? Nah, The following are some of the things that make financial literacy very important for all levels of society.
1. Know various financial products
First, financial education is very important because it can make people aware of several types of financial products. It’s also for the good of the community itself because of the wider knowledge they have, the people who are most familiar with also getting to know financial products while enjoying the full benefits.
2. Understand how to use financial products
Furthermore, financial education can make people more skilled in using the financial products used. Once the community includes and has a broad vision related to financial products and services, the community can enjoy the benefits of these products with the knowledge they have. The community can also select and finalize which financial products or services are required.
3. You can improve your well-being
Even related to the previous two reasons, if people are experts in using financial products and services, then the level of welfare will also increase. The community will have the ability to manage finances and plan wisely. Especially if you can master investment, then people can independently use additional income for personal finance.
4. It can minimize the risk of fraud
Lastly, financial education is also useful for minimizing the risk of fraud and other forms of crime. When people already have adequate knowledge and provisions related to financial products and services, people will not be easily deceived by things such as big investments, monkey business, ponzi schemes and other forms of crime.
Financial aspects of the Chen and Volpe version
There are some important things that you must know and understand the shine and understand some aspects of finance. Well, according to Chen and Volpe, there are four aspects of financial education that everyone should have.
First, the public must have a basic understanding and knowledge of personal finance. This first aspect has a close relationship with basic matters related to individual finance. Second, the public must know very well about financial products in the form of savings and loans, for example, the use of credit cards.
Third, people must have basic knowledge about insurance and some products, such as life, health, vehicle and other insurance. Finally, investment. Investments are useful as personal savings, therefore, one should know the investment risks, market interest rates and others.
Financial education is a competency or skill that must be taught from a young age. Children should be familiar with managing their own pocket money using the cash system. For example, effective for toys, snacks and savings. With high discipline, children can then handle finances and understand priorities.
Similarly, for adults, especially entrepreneurs and entrepreneurs such as employers, they must have a qualified financial education so that financial stability can be maintained. For business owners, it is necessary to pay attention to the income and expenses that occur on a daily basis. Commercial finance records are mandatory matters that must be dominated because financial education is a knowledge that also includes commercial government.
Nowadays, people are also starting to study digital finance education. Digital financial education is the capacity and knowledge related to digital-based financial products and services. This is due to digitization which allows captains to register commercial finance through applications such as BookWarung.
BookWarung is an application that supports commercial financial records for Indonesian MSMEs. In addition, there are many other useful financial features, such as recording reminders, financial reports, payment invoices, digital visiting cards, and Talangindulu. What are you waiting for, immediately download the application on the Play Store or App Store!
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