The Importance Of Financial Literacy, Does Financial Literacy Improve Savings?

Over the past centuries individuals have become increasingly in-charge of their financial well-being after retirement. In the financial sectors where it has become more difficult, individual are faced with an increase of new investments products, many of which are new and often fairly complex. Investment opportunities have extended beyond national boarders, allowing individuals to spend in a wide range of assets and currencies. However, it is very hard to steer this new financial structure and the penalties of the mistakes made can be devastating as the financial crisis had made it very clear (Lusardi, 2008). This essay will focus on the importance of Financial Literacy on savings; does it (financial literacy) improve savings? And is there

Programs that have been undertaken with relation to financial literacy have generally improve individual knowledge about finance and can cause them to make wiser decisions. Although the direction for causality remains unclear, existing research have suggested that there is, in fact, a connection between financial literacy and behavior (savings) (Hogarth, Beverly and Hilgert, 2003). The relationship between financial literacy and behavior does not necessarily mean that more knowledge improves savings but perhaps more experience in financial activities or learning by doing leads to more financial knowledge. People are not only educated about finance and economics in schools or in attending programs, they also learn and accumulate new behaviors in different methods and places. Many individuals learn more about finance and esp. savings within their household. This happens when the level of financial knowledge within a household is very much high and qualitative which can obviously affect its inhabitants ensuring behavior. Most individuals in this era learn and understand more by doing it or through

There are two ideal venues for the delivery of financial education and that is in schools and in workplace. In the workplace, several initiatives can been undertaken to solve and improve financial crisis, such as educating workers to improve their financial literacy and knowledge about pension, automatically enrolling workers in pension plans and simplifying workers’ pension membership decisions. While these programs have had some impact on individuals’ savings behavior, much more can be done to improve its effectiveness. The very reason why schools are one of the ideal venues is because it is not only the adult population who lacks financial knowledge but also the young generation. There may be advantages to introducing financial literacy into high school curricula given the benefits that financial literacy brings. While at the same time other financial education programs may occur beyond the school compound, results shows that student cannot learn and understand much from such existing programs (Hogarth, Beverly and Hilgert, 2003).

Workplace programs usually offers very limited interventions, such as one-time retirement seminar or one benefit fair. It is hard to imagine that such intervention can do much to fight the widespread of financial