With the growing sophistication of financial markets and a rapidly increasing array of financial products and tools, it has become necessary for persons to invest time in their financial education, Grants manager at the JN Foundation, Rose Miller, who leads the Foundation’s empowerment programme, posits.

“For example,” she pointed out, “with governments in many countries pushing to improve financial inclusion, the number of people with bank accounts and access to credit products is rising at a faster pace.”

“Furthermore, changes in the pension landscape now places more decision-making responsibility on persons who previously relied solely on their employers or governments for their financial security after retirement,” she added.

The situation is compounded, she added, by the low level of financial literacy among Jamaicans.

“Financial education is important for everyone. No matter where you are in life, you need to take time to invest in yourself and seek to improve your financial IQ,” she stated.

According to the Standard & Poor’s 2015 Global Financial Literacy Study, only 33 per cent of adult Jamaicans are considered financially literate.

Financial literacy is defined as the convergence of financial, credit and debt management and the knowledge that is required to make financially responsible decisions which are integral to our everyday lives.

Miller said that financial literacy is a core skill which all Jamaicans should work towards developing and honing. She explained that it impacts the daily decisions which an average family makes when trying to balance their budget; purchase a home; fund their children’s education or ensure their personal income at retirement.

The subject also includes understanding how a chequing account works, knowing what using a credit card really means, how to avoid debt, and the importance of a good credit score.

The Standards and Poor’s 2015 survey on financial literacy also noted that financial ignorance carries significant costs. The ratings company noted that consumers who fail to understand the concept of compound interest spend more on transaction fees, run up bigger debts, and incur higher interest rates. They also end up borrowing more and saving less money.

… ‘Avoid the high cost of financial ignorance’

Grants manager at the JN Foundation, Rose Miller, concurred with the Standard and Poor’s 2015 Global Financial Literacy Study relating to Jamaica, noting that the potential benefits of financial literacy are manifold. She said that financially literate people are more in touch with their finances, and are therefore able to make sound financial decisions based on knowledge and facts rather than on hearsay or a simple hunch.

“They recognise when they’re getting sound financial advice, as opposed to foolish advice. They are also able to decipher and navigate their way through the myriad of financial information that faces them,” she related.

Miller further pointed out that financial education is important as it enables persons to maximise their income.

“Financially savvy people are also able to invest wisely. They are more likely to diversify risk by spreading funds across several ventures. They’re also able to spot opportunities that will help them to advance themselves financially and attain financial security,” Miller explained.

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