Business Experts Say: Financial Education a Must for The Students
11:40 09 October 2019
Dilip Soman, Professor & Co-Director of Behavioural Economics in Action at Rotman (University of Toronto) argues that the benefits of financial literacy are undeniable for virtually everybody. For those wondering why is financial literacy important for youth, in particular, the answer is straightforward: recently, people worldwide have experienced an increasing diversity and complexity of financial products (credit cards, loans, mortgages, investment mechanisms). In particular, credit cards have exacerbated the problem of irresponsible shopping, while loans, mortgages, etc. might have determined many people to abandon the habit of saving. Importantly, while older generations have adapted to this reality, the current youth was BORN into it, hence, financial literacy for students could be a far more vital skill for them than for elders. Besides, they will soon become those who shape society’s trends.
Ways to Address Financial Illiteracy
A 2011 US study showed that most Americans do not plan for predictable events like children’s college education or retirement and even less so for unexpected expenses or emergencies. The situation is similar in other developed countries - in Canada, 31% of people struggle with their bills.
The necessity to improve financial literacy has determined the OECD to run an international student assessment program (PISA) that now includes financial literacy among tested knowledge (Australia is also involved). The same program demonstrated on 15-year-olds that teaching financial capabilities produces a significant positive outcome on financial decision-making – this clearly indicates where current efforts should reside.
As this article suggests, some key financial literacy skills are learning to control vicious spending, forming the habit to regularly deposit money into a savings account, but also getting familiar with taxation policies. The latter is especially relevant in a world where freelancing/ self-employed professionals are becoming a norm - these categories aren't paying taxes by default but are nevertheless required by law to do so and there is a knowledge vacuum surrounding this issue even in countries like Australia. For instance, far from everyone knows that money earned from a hobby is absolved of taxation in Australia (there are a few tell-tell signs that help taxation authorities distinguish between hobbies and for-profit activities).
Australian Taxation Office is informed about a freelancer’s additional taxable income and already from the second year of his/her activity, starts sending quarterly tax instalments. Nevertheless, freelancers still need to calculate their taxes in advance to estimate how much they’ll be paying. This is even more important considering that sometimes, unpleasant paradoxes can happen. Thus, someone might earn a few hundred dollars per year of additional income on top of the primary income, but all of a sudden, this person might be taxed more, even for the primary income (cancelling any gains). Because of the higher income, automatically “qualifies” him/ her for a higher tax bracket. Everyone needs to be keenly aware of this issue.
As for startup owners, they need to be aware that any incurred expenses that are directly related to earning income can be claimed as a tax deduction. For freelance writers, this includes, computers, office software, training courses, travel, etc. but also the Internet or electricity – however, given that the latter is subject to private use as well, only partial deduction is possible (only work-related expenses). There are many nuances regarding private and business taxation - it takes time to become familiar with all of these but this is a 100% worth it for anyone and especially for students, given that they are expected to pay taxes for decades, regardless of what they decide to do in life.
Students nowadays are bombarded with much far less useful knowledge or time-consuming tasks, also as part of their formal education. Fortunately, the emergence of affordable online academic assistance helps to share the academic burden. Thus, students can recruit a service do my paper for cheap for virtually any academic task they can imagine. For instance, they can delegate a task requiring critical evaluation of a peer-reviewed article to an article review writing service and can use the additional time to pursue their interests and needs instead, such as learning about finances.
Finances and financial instruments are an essential aspect of life for most people in developed and developing countries, but it is sad and shocking to acknowledge that so many lack basic knowledge regarding these. A mandatory measure for addressing financial illiteracy is to include such knowledge in the curriculum of younger generations. Meanwhile, students and adults who haven’t benefited from it can also do very much to inform themselves – this can be achieved by learning about various financial instruments, investment opportunities, about taxation policies and legislation. Leading a reasonable and mindful lifestyle, planning and monitoring expenses, keeping vicious impulses under control represent important safeguards against sliding into a financial black hole.
Susan Wallace is a marketing specialist with a keen interest in the booming industry of content writing services. She often evaluates and compares various academic assistance and content writing platforms for different target groups: students, small and medium businesses, advertisers. The author has also acquired extensive knowledge about the internal organization, dynamics, and evolution of such businesses.