With the rapid development of the economy, financial literacy has been playing an increasingly important role in our day-to-day life. Financial literacy is the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it and how that person donates it to help others.
On no account we can ignore the value of financial literacy. In fact, over the three decades or so, there have been vast changes in China’s economic system. Financial literacy would sharply change people's behavior, values and ideas. Lives has in many ways become easier than has ever been before.
However, the number of poor is surprisingly large. Almost 48% of people in the China said they were struggling and only 19% judged themselves to be thriving, according to a report (2012) issued by the Chinese academy of social sciences. That means, they do not have extra discretionary income, and they may be ignore all other things except basic cost-of-living. Therefore, most of the poor people don’t know about financial literacy. They don’t realize that financial literacy has already benefited our daily lives in many ways, it helps us to know how to spend money wisely, it also teaches us some methods to earn money, and it supports to find a good job and create our own business or career.
One of the positive effects is that financial literacy can help us to spend money wisely. At the beginning of every month or every year, if we can make a good financial budget for the following lives, our lives can become more comfortable. Every day, when we see the financial budget, we know what we should buy and what we should not buy, we have a purpose to spend money.
For example, young couples who want children are very necessary to make a budget. As all Chinese know, raising a kid today costs an arm and a leg. A survey by the national bureau of statistics found that taking Beijing as an example, the average cost of raising a child in 2010 was around 2,700,000 yuan (equals to $ 44 million). However,the premise is that the child is healthy enough, and doesn’t have any serious illness. Also, this is not include selects school fee, that means, the child can not accept a good education, and they may lose the opportunity to receive higher education. Therefore, when a baby was just born, parents should make a budget for their baby. One of the most simple methods, parents can set aside a portion of their income to save for their child’s college education. Money we save today will compound enormously by the time we actually need it. Just like parents can put 100 dollars in education foundation one month, after 18 years, it is a frightening number of money value.
Especially for the poor, it will help even more. Such a easy budget, which only need a little bit of simple financial knowledge, can contribute to their family's economic standing and be able to shape their children's future. Furthermore, without the budget you will waste time on senseless activities. Such as, you may buy a bunch of useless things which you will never use until throw them out. In another word, you're wasting your precious time! In this modern world, everything is moving fast, time is your life, if you waste, you will fail. Therefore, financial literacy will help us to spend money wisely, and save time to do something constructive . At the end of the budget period, you will be surprised by the unexpected money, the money also has the potential to become your life-saving straw. So don't belittle it.
Another positive effect is that financial literacy teaches us how to earn money. As we all know, China is at a stage of great development in economic construction. During this peculiar period, people will have the opportunity to become a millionaire. In fact, these successful people are gathering wealth through investment which is a very common theory in financial literacy.
For ordinary people, they should looking for a low-risk place to invest or buy some short-term financial products following some financial literacy rules, such as government bonds, stocks of good companies. But the continued stability of market demand for China's debt is uncertain at current yields. This will need financial literacy to run through the costs to give viewers an idea of the risks of making the leap. After that, people will know whether they can buy the financial products or not.
Try to imagine, if you have some financial literacy, you could exactly calculate your chance to earn money, well, why not make more money than it ever did? Most of the time, we don’t trust somebody else and don’t want to finance, because we don’t have that knowledge. So, educate ourselves some financial literacy. Learning some simple financial literacy, such as fiscal and tax policies and monetary policy. Using all of that and then connect with the current government policy, people can easily analyze the financial products. If you can wake up your latent talent, maybe you will become another Warren Buffet. These successful examples are very common in today’s China, and Chinese are getting richer and richer.
The last effect is that financial literacy helps us to find a good job and create our own business or career. Because every company has employees who analyze its financial data and enhance its decision support process by providing their insights and analyses to management. According to Lewin’s (2014) article, people, having real skills, can find a well-paying job easily.
Also, the financial sector has already become the core business management departments. However, if you compared with other occupation, such as dentist, engineer, teacher and some others, you will find that not every place need dentist and teacher. So, the people who know a lot of financial literacy can easily and quickly find a well-paying job. For example, even though you are only a clerk in the company, you still need to travel on business. All travel expenses are chargeable to the company. If the employees have some financial literacy, they will spend money in the right place.
They can also calculate their taxes easily, and have ability to do their own taxes. The company won’t need to hire staff to help them for the personal tax. 2012, 35.65% jobs require financial literacy in China. In addition, financial literacy has become the company’s basic survival skills. For instance, you want to create your own business. At first, you need to write a business plan and finance your business. All of these need financial literacy to support.
So in today’s workplace, it’s no longer enough to be specialize in your own major, extensive financial literacy is quite necessary. This is a widespread phenomenon in China. Every people want to learn some financial literacy in order to find job easily. Yet a survey in 2012 reckoned that 75% of students in China like to choose economic management and financial, 36.6% overseas students from China choose economic and financial professional.
Financial literacy should be taught to all the people, whether they are rich or poor. Because it really focus on help people to change their life. It support people to manage money better than ever before. For the poor, they can save and earn more money easily. That means, if they learn some simple financial literacy and can properly use it, their living standards will improve to a new level. On the other hand, for the rich, they should also need financial literacy to help them spend wisely instead of just buy lots of luxury things. So they can use the extra money to support poor children to accept education.
In the long term, the whole society will progress to a certain extent, so the rich people can also get some benefits back. Therefore, we could add some simple financial literacy to the public school’s curriculum. Children can know it as soon as possible, and their money management skill can be cultivated in the childhood. In other way, remote mentoring could educate people more convenient. There is no time and space limit, people can learn it when they need some financial literacy to support. I really recommend to popularize the financial literacy to all the people.
All of above is now clear that financial literacy has already benefited Chinese people’s lives. With it help, we know how to spend money wisely, we learn some methods to earn more money, and we also can find well-paying jobs easily. Especially for the poor, because they need to find well-paying jobs in order to increase their standard of living. After that, basic necessities of life can become much more better. It will directly affect on the Chinese economy and society. So educating poor people a little bit financial literacy is very necessary.That will change them life style and they can become richer. We also can not ignore that because of this reason, China has become more and more powerful and rich. Therefore, people, not only for the poor, but also for all the people from China, should learn some financial literacy in order to living in a comfortable and happy lives.
References
1)Central compilation and translation bureau.(2012). Chinese College Students Employment Report.
Retrieved from http://www.eic.org.cn/dl_news/20121026240256.html
2)China’s own national bureau of statistics.(2013). China overseas development report. Retrieved from http://www.eic.org.cn/special/eic_2013_report/
3)Lewin, T. (2014, Oct 13). Web-Era Trade School, Feeding a Need for a Code. The New York Times. Retrieved from http://www.nytimes.com/2014/10/14/us/web-era-trade-schools-feeding-a-need-for-code.html?_r=0
4)Xiao, J., Chen, C., & Chen, F. (2014). Consumer Financial Capability and Financial Satisfaction. Social Indicators Research, 118(1),415.doi:10.1007/s11205-013-0414-8
