Financial Literacy- An Essential Education That Is Missing

All my life as a student of economics and also as part of the education system, I have been amazed at the lack of financial knowledge both in our society and our education system.

Baha’i Writings have put great importance on education, and always emphasize both the spiritual and material education.

“The primary, the most urgent requirement is the promotion of education. It is inconceivable that any nation should achieve prosperity and success unless this paramount, this fundamental concern is carried forward. The principal reason for the decline and fall of peoples is ignorance. Today the mass of the people are uninformed even as to ordinary affairs, how much less do they grasp the core of the important problems and complex needs of the time.”  -Abdu’l-Baha, The Secret of Divine Civilization, p.110

We are to prepare the student in schools for the adult life ahead, and yet the most critical aspects of their life have been ignored entirely. I am not sure that those who designed the system did not think that managing finances were essential or they did not have a reasonable idea about it themselves. Whatever the reason the fact is that I have seen many of my ex-student coming to me and say “I was cheated 12 years of my life because nobody taught me how to manage my finances.” You do not have to take their words for it, there have been many studies done in this regard and many papers been written and yet we are facing the same problem, and the problem continues to play havoc in the life of our citizens. To prove the point I mention one example of the study published in “Journal of Applied Social Psychology”, and the gist of the study is:

“The issue of credit‐card debt among college students has received increasing attention. This study explored factors hypothesized to be causes and effects of credit‐card debt in 448 students on five college campuses. Students reported an average of $1,035 (SD=$1,849) in debt, including students without credit cards or credit‐card debt. Lack of financial knowledge, age, number of credit cards, delay of gratification, and attitudes toward credit‐card use were related to debt. … Students reporting greater debt reported greater stress and decreased financial well being. Results highlight the need for comprehensive financial literacy education among college students.”

Our education system aims at arming the students with the tools that make them successful materially without explaining the real meaning of success. They teach the concept of competition and eliminating the rivals as means of success without mentioning the virtues of co-operation. They follow the old notion of a materialistic view that having more money is the highest point of success.

The tragedy is that even with this definition of success still students are cheated because even if they manage to get the well-paying job or starting a successful business, they have no knowledge how to manage their finances and do not know what to do with it. This lack of basic financial education will lead them to ruin. That is why the rate of bankruptcy has increased. Also, so many of repossessions of people’s belongings have become subject of reality TV shows.

“However, until material achievements, physical accomplishments and human virtues are reinforced by spiritual perfections, luminous qualities and characteristics of mercy, no fruit or result shall issue therefrom, nor will the happiness of the world of humanity, which is the ultimate aim, be attained. For although, on the one hand, material achievements and the development of the physical world produce prosperity, which exquisitely manifests its intended aims, on the other hand, dangers, severe calamities and violent afflictions are imminent.” – Abdu’l-Bahá, Selections from the Writings of ‘Abdu’l-Bahá, p. 284

These shortfalls are due to many reasons. One is the fact that they never were taught the real meaning of possessions. They were not reminded about their spiritual or their moral side of their life so that while perusing their financial goals, they should also add values and ventures in their goals.

“Wealth is praiseworthy in the highest degree, if it is acquired by an individual’s own efforts and the grace of God, in commerce, agriculture, art and industry, and if it be expended for philanthropic purposes.  Above all, if a judicious and resourceful individual should initiate measures which would universally enrich the masses of the people, there could be no undertaking greater than this, and it would rank in the sight of God as the supreme achievement, for such a benefactor would supply the needs and ensure the comfort and well-being of a great multitude.  Wealth is most commendable, provided the entire population is wealthy.  If, however, a few have inordinate riches while the rest are impoverished, and no fruit or benefit accrues from that wealth, then it is only a liability to its possessor.” -Abdu’l-Baha,  Secret of Divine Civilization, Pages 24-25

The other reason is that they did not know the basic knowledge about the value of money or its management. They were taught the importance of planning for the long run and save for the rainy day or the fact that they can use the money for the good causes. They spend whatever they earned and in most cases spend way beyond their earnings which led them to bankruptcy.

“If, on the other hand, it is expended for the promotion of knowledge, the founding of elementary and other schools, the encouragement of art and industry, the training of orphans and the poor – in brief, if it is dedicated to the welfare of society – its possessor will stand out before God and man as the most excellent of stand out before God and man as the most excellent of all who live on earth and will be accounted as one of the people of paradise.” -Abdu’l-Baha, Secret of Divine Civilization, P. 25

Whatever the reason for this shortfall in our education system or our society, it makes it clear that by our action we can set an example to others how our material possessions can be used for the betterment of humanity. Our efforts have to be developed by the following the spiritual Teachings, which implies to study the Writings and follow the advice of the Universal House of Justice the governing body of the Baha’is to educate ourselves and those who are interested to learn, so that we can face and conquer the cancer of materialism by education and make a contribution to the welfare of humankind.