Why do we still struggle to understand the concept of Financial Independence?
The basic understanding of financial matters involves taking informed decisions about planning our day to day budgets, prioritizing the importance of saving and converting savings into smart investments. Nowadays educational institutions are trying hard to educate their students on every possible topic however financial literacy is an area where they lag. Irrespective of the career, financial literacy is the basic requirement for every person in order to secure their financial future, as managing finances is a struggle for every young one these days.
Even in 20s, most of the youth doesn’t bother to plan their budgets or make savings and invest that savings to earn additional money which may help them in the future. Most of them get to open their bank account at their first job and get consumer products i.e. credit cards with little knowledge of the working of credit system. This could be the reason that most of the people don’t reach financial independence even in their 40s.
Financial independence is only possible when the person have enough income for the rest of life that he/she can use to pay expenses without having the need to be employed or being dependent on another person.
A clear understanding of financial matters can lead to financial independence through determining multiple sources of income and investing those incomes into good opportunities. This may enable our youth to see the available opportunities that they couldn’t think/consider earlier as sticking with a single source of income might be the reason that most of them tend to struggle more in their regular financial matters. Therefore educating youth on financial matters early in their lives is the need of the hour to enable them to take smart financial decisions.
MBA Student – Bahria University