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Principles behind Financial Literacy

Principles behind Financial Literacy

The main principles found to contribute to the existence of this strategy are discussed in this section. First is the inclusiveness principle which requires that all parties and citizens freely participate in the financial literacy education and in the capital market. This principle has been taken by eager investors as an opportunity to get financial knowledge and invest in shares and debentures (Butel & Rodgers 2007).

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Second is the principle of engagement according to which the government promotes literacy education by ensuring that all citizens access and retain financial literacy knowledge for household consumption and investment purposes. This was observed to promote the investment level among the youth and even among the aged population.

Third is the principle of diversity, where people are found to invest in different fields. Thus, the financial literacy education was also promoted by this principle. In addition to that, there is a principle of knowledge and empowerment, which requires that necessary resources be allocated to all citizens to promote financial literacy and enhance investments of citizens. The other principle which was embedded on the existence and expansion of education was improving outcomes principle, which advocates that market investors should rely not only on the available information while investing in capital markets. Investors should target all information that will help them make the correct choice regarding investment assets.

There is also a principle of partnership that advocates a good road map and strong cooperation between various sectors and body agencies in promoting investment in the capital market (Healey 2010). This has made it possible for market investors to avoid obstacles or risks in investment process. Lastly, there is the principle of measurement that requires investors to make suitable measurements in the race to buy shares and bonds. They must work closely with various agencies in order to identify the best opportunities.

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Education as a Pathway to Market Investors’ Financial Literacy

Education has been found to be the main driver to the success of the financial literacy program in most of the European countries. It was found that most of young people use financial knowledge to make own financial investments and to consume limited resources in the best manner possible. This is evident in Australia, where education pathways include childhood education, then school education level, and later the tertiary form of education, which comprises of universities and the tertiary type of education. Adult form of education has also been used in the country to spread financial knowledge among adult investors that did not go back to school.

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In addition to the classroom education, the government has also decided to use Facebook, social media houses, and Twitter communication wall to reach youths that do not go to school. Young people are educated on how to invest their money in various projects such as buying shares and even start their own businesses before they are given loans and other types of financial aid by banks and the government. This has transformed the life of many youth in the country and led them away from extravagance decisions. It transformed them into market investors capable of making smart financial decisions. It also enabled them to control their consumption behaviour and take advantage of profitable financial stock market opportunities such as buying debentures and bonds from the government or from privately owned companies.

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