Financial literacy important

THE savings culture is something many Papua New Guineans struggle to master.
That’s the message from the man PNG loves to follow in the National Rugby Leage, Melbourne Storm centre Justin Olam.
Olam, being the National Superannuation Fund (Nasfund) brand ambassador, sees the need to promote this concept of savings.
Nasfund chief executive officer Ian Tarutia thanked Olam for using his time and position as brand ambassador to assist the fund promote a savings culture through superannuation.
Currently, 850,000 or 9.4 per cent of Papua New Guineans are contributing towards their retirement; this means more than 90 per cent of our people are missing out on this benefit.
Saving money is not something most Papua New Guineans are good at. Obviously, PNG struggles in the area of financial literacy.
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting and investing.
The lack of these skills is called financial illiteracy.
The crutch of financial literacy is about creating wealth and having a series of income making assets so if one breaks down, there are still other generating income.
Financial literacy is not really about the power of money, but having a sound mind that will help people know how to use money and channel it to work.
With financial literacy and a good cash flow, it enables people to make good decisions, have good homes and good standards of living and bring the country up the poverty line.
Financial literacy is important because it equips us with the knowledge and skills we need to manage money effectively.
Without it, our financial decisions and the actions we take – or don’t take – lack a solid foundation for success.
Nearly half of the working Papua New Guineans do not expect to have enough money to retire comfortably and that is the reality.
Most households in the country appear to be generally better at managing immediate and shorter-term financial activities but are less competent at managing longer term financial activities (including activities which require forward planning) and more complex financial activities, including those which require engagement with the formal financial system.
According to the World Bank’s Papua New Guinea Financial Consumer Protection Diagnostic 2018 report, one quarter of Papua New Guineans obtain credit from unlicensed moneylenders.
Though there are no official statistics available, it is estimated that PNG’s unregulated lending sector may range from approximately 50 to around 280 registered businesses that offer short-term (pay-day) loans to government employees and to some private sector employees.
That is not even taking into account all the non-registered businesses offering the same services.
Financial literacy and financial inclusion are becoming pressing issues in PNG and is receiving increased attention.
Improved financial literacy can increase economic participation and social inclusion, drive competition and market efficiency in the financial services sector, and potentially reduce regulatory intervention.
The push for financial inclusiveness is achieving considerable success, but greater understanding of money and savings is needed.
Saving money is incredibly important.
It gives you peace of mind, expands your options for decisions that have a major effect on your quality of life, and eventually gives you the option to retire.
Most people who are wealthy got there through a combination of their own hard work and smart savings and investment decisions and you can become one of those people, too.
Only financial education will make a big impact on our community.