The Evolution of Financial Education

Financial literacy is the ability to understand finance. Specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances.


When did the Evolution of Financial Education begin?

Tracing human existence in early days, little knowledge about finance is evident. Our ancestors traded goods with each other as a source of living. This process of exchange is called barter system in which one party offers and receives something valuable from the other person regardless of the true worth of the thing in contemporary times. This practice continued until the leaders of the state standardized a medium of exchange which is money. It was at this stage that money was given value to some extent.

In 1930, Great Depression happened prior to World II. People and businesses suffered from inflation and low level of income. Industrial production was so low in many countries, whereas unemployment surged high. Everyone seemed hopeless especially when World War II ensued. This however has brought positive results to mankind such as the incorporation of a new perspective. People then become intelligent and desirous to learn more. It paved the way to the emphasis for financial management as a very important field of study. This phase has brought to man’s consciousness the essence of saving money in dire economic time. More challenging crises emerged.

In 1970, the energy crisis took place which affected business operations and high level of prices in all products even commodities. During the period, many thought that oil companies intentionally did it to raise prices at a level that they will benefit from it. This made everyone so meticulous in their money management obligations.

The advent of World Wide Web in the early 90’s made a tremendous impact in the information and communication technology sector. It paved the way for fast information processing where almost everyone has an access to the present trend and state of the economy. It resulted to the booming of the stock market including companies doing businesses online. At the other end of the pole, people became more conscious of these happenings.

Long before these is the introduction of financial management as a crucial subject for students enrolled in Business Administration related courses. The principles of the subject include teaching all students financial management and its relevance in business. Advocates of this field have long insisted that it will be an introductory subject to all students regardless of field of specialization because of its essence for personal money management, financial outsourcing and as a vehicle towards financial independence. This should be the focus of the government to make everyone be aware of the impacts of such changes in the capital market and the opportunities seen in it.

The global financial crisis starting from 2007 is known to be the worst economic downturn in the entire history. This was caused by the downfall of the banking system of the United States of America. It even resulted to large financial institution bankruptcy. The world panicked and everyone tries to overcome the challenge by tightening one’s belt. With the controlled economic activity of some businesses and even the government, one must be self-sustaining to combat this great challenge.

It is for these reasons that financial education be advocated to help a person become well prepared and anticipating. Saving money, reducing expenses, engaging into business and investing into diversified portfolios are among the feasible options to counter the various economic challenges. Indeed, this is the right time to love financial education and apply whatever we learn from it.