[Must Read]...Financial illiteracy, the root of struggle

The author of the book, ‘Practical steps to financial freedom and independence,’ Mr. Usiere Uko, explains in this article why people need to invest in financial education

The major challenge with money is that it does not come with a user’s manual. There is no formal education on the subject of money.

Wisdom in handling money can be found in holy books, but very few seem to be able to decode and apply it in their everyday lives.

Most of our financial education or lack of it comes from home, school, places of worship, place of work and peer group.

 The subject of money seems to make most people uncomfortable. It makes one seem to be carnal, unspiritual, greedy, materialistic, a friend of mammon etc, hence the subject is often avoided.

Lovers skirt around the topic. If there is love, money will take care of itself, they claim.

Continue after the cut...

Inherited habits

Talking about money is not politically correct. There is no structure around financial education. It is typically a hit and miss scenario.

Most of our financial habits are inherited from our parents; the way they spoke about money and the way we saw them handle money.

We seem to believe that the wisdom to handle money will come naturally to us when we start working and earning money. The money will take care of itself.

The predominant mindset when it comes to finances in most homes is that of lack, of not enough.

The most common spoken word in most homes is ‘NO’, and most of it comes from a lack mentality.

You often hear comments like: “Money does not grow on trees”; “I did not pick the money from the floor”; “Am I Dantata? (Now it would be Dangote, Bill Gates etc)”; “We cannot afford it”… the list is endless.

At school, well-meaning economists drove the message home – resources are limited and human needs are insatiable. When limited resources meet insatiable needs, the result is a constant state of lack.

You can never be rich. No one is a millionaire in this family. Stop building castles in the air. Rich people are greedy thieves. You do not know what they did to get their money. I would rather stay poor. These are excellent excuses to remain stuck in one spot financially.

The message we get

We were hardly taught how to afford things, how to dream big and start small. We watch our parents become experts at managing lack rather than creating abundance.

We were brought up to believe that money is earned by bestowing our time and labour. We got rewarded for good behaviour or performance through spending – we get a gift or are allowed to choose a gift.

The message we get is – work hard to make money and then spend to enjoy the fruit of your sweat.

We are not taught to invest for profit and enjoy the fruit of our investment skills. We were taught to go to school, get good grades, get a good paying job with good salary and pension, and live happily ever after. Nobody warned us that that fairy tale went with the industrial age.

In real life, first class graduates and PhD holders struggle while school drop outs and the not so brilliant dominate the Forbes Rich List. The first class graduates and PhD holders work for folks who dropped out of school or never went beyond first degree.

When Henry Ford was asked why he had no PhD, his answer was he could summon many PhDs at the press of a button.

It seems there is no direct correlation between academic intelligence and financial intelligence.

Academically sound, financially clueless

Interestingly, it seems the higher the academic IQ, the lower the financial IQ. The brightest professionals seem to be the ones that have the most challenge with entrepreneurship and money management. Outside of earned income, they do not seem to do well on the streets.

Despite the reality that academic performance is not an indicator of success in life, most folks still focus primarily on grades rather than on preparation for life outside academia and the corporate world. They are ready to give an arm and leg for academic qualifications with hardly any attention paid towards financial education.

Some students cheat, plagiarise and pull all sorts of stunts to gain paper qualifications. Some parents aid and abet this crime, bribing teachers, invigilators and helping fuel the booming business called ‘special centres’.

 The focus is passing on paper while being clueless when it comes to the game of life and money. Graduating students become applicants rather than entrepreneurs pursuing their dreams.

Why are we so sound as professionals and clueless in making money work for us?

Why do we have high academic IQ but low financial IQ?

Root of financial struggles

Financial illiteracy is the root of financial struggles; lack of financial education leads to financial illiteracy, and low financial intelligence. When you are financially illiterate, you make poor financial decisions and sentence yourself to a lifetime of financial struggle.

When you lack financial education, money becomes your master rather than your servant. You work hard for money rather than having money work hard for you.

Money tells you what to do rather than you telling money what to do for you. You accumulate liabilities thinking they are assets and remain trapped in the rat race.

Striking a balance

There are three broad types of education namely, academic, professional and financial education. All are important, if you want to succeed in every aspect of your game.

 While academic and professional education gives you a job, financial education gives you options to decide what you really want to do with your life, rather than live under the fear of not having enough money and clinging to a job you neither love nor has anything to do with your life goals and dreams.

 Your education does not end with attainment of academic qualifications or professional fellowships. Learning is a lifelong process and should encompass all aspects of life. Without financial education, an individual and his money soon part ways.

Many have earned millions only to end up struggling financially due to lack of financial education. Without financial education, you are setting yourself up for a lifetime of financial struggle and living life without options, especially the choice to go for your dreams.

The best investment you can ever make is to invest in yourself, especially your financial education. This is the investment that brings the highest return on investment. As you become better educated, you are equipped to make better investment decisions which results in better returns on your time, money and effort.

- Usiere Uko

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