The place of financial education in financial inclusion

The place of financial education in financial inclusion

Before starting, let us remember this thought of a contemporary my people suffer for lack of knowledges”. From this thought, we can understand that the lack of knowledge can be the origin of our setbacks. In this order of idea, the lack of financial education can be the origin of low financial inclusion rates observed in some areas around the world.

Africa remains one of the continents with the lowest level of financial inclusion in the world. According a report of Societe Generale des Banques, banking rates range from 8% to over 60%. In this article we present the link between financial education and financial inclusion.

La World Bank views financial inclusion as a key catalyst for reducing extreme poverty. In Africa, we still observe a timidity in this sense. Although microfinance operators make it the heart of their mission, many things remain to be done.

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In this article, we present the place of financial education in the financial inclusion of populations. To do this, we first explain to you what is meant by financial inclusion and then all that need to know about financial education.

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🚀 What is Financial Inclusion?

Financial inclusion means that individuals and businesses have access to useful financial products and services and affordable that meet their needs. These are transactions, payments, savings, credit and insurance provided in a responsible and sustainable manner.

Being able to access a bank account is a first step towards broader financial inclusion. A Bank account is used to store money and to send and receive payments. A bank account also serves as a gateway to other financial services.

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That's why ensuring that people can access a bank account is central to the World Bank Group's Universal Financial Access initiative.

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Financial access makes day-to-day life easier and helps families plan everything and set strategic targets. As account holders, you are likely to use other financial services such as credit and insurance.

This way you can create and develop your business, invest in education or health, manage risks and cope with financial shocks.

add finance
Financial inclusion

🚀 Why is financial inclusion important?

Lack of access to basic financial services can create crippling financial problems for the people.

They may have no means of receiving certain payments. For this, they are prevented from making purchases due to the lack of an easy way to submit payments.

Access to financial services is important for both individuals and businesses. This access makes it possible to store money, manage payments and cash flows, accumulate savings, access credit and make investments.

This access is also essential for acquiring assets and building financial security.

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Financial inclusion enhances the availability of economic resources and builds the concept of savings among the poor. Financial inclusion is a major step towards inclusive growth.

It contributes to the overall economic development of the underprivileged population. Effective financial inclusion is needed to uplift the poor and underprivileged by providing them with the modified financial products and services.

Your level of financial literacy greatly influences your your quality of life. It affects your ability to support yourself and your family. Your attitude towards money and investments as well as your contribution to your community is affected.

Financial literacy enables people to understand what it takes to achieve a financially balanced lifestyle, sustainable, ethical and responsible. It helps entrepreneurs to leverage other people's money for business to generate sales and profit.

🚀 Barriers to Financial Inclusion

There are many barriers to financial inclusion, the first of which is extreme poverty. People with little or no money have little or no need for financial services.

In addition widespread extreme poverty, other barriers often prevent poor people from accessing basic financial services.

Financial institutions often impose strict and detailed documentation requirements for opening an account or making money transfers. People who do not have the required documentation are then effectively excluded from accessing financial services.

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In addition, proximity branches and high minimum account opening balance requirements are additional barriers to financial inclusion.

Finally, many poor people do not know how to access or use financial services. This is what we discuss in this document, the problem of financial education.

🚀 What is financial literacy?

La financial literacye is the ability to understand how money works. It also helps to understand how someone does it, manages it, invests it and also spends it (especially when donating to charity) to help others.

A thorough knowledge of financial education is necessary to understand how does money work and how it can work for you – even when you're sleeping – by investing in profitable areas like stocks or the money market.

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To understand money and how it works, it is important to understand common principles of financial literacy. Here are the principles of financial education: ofinancial objectives, budgeting, investments, retirement, contracts and employment models.

Studies conducted in different countries on financial literacy have shown that most individuals (including contractors) do not understand the concept of compound interest and that some consumers do not actively seek financial information before making financial decisions.

Most financial consumers lack the ability to choose and effectively manage a credit card, and lack of financial education is responsible for the lack of money management and financial planning skills for business and retirement.

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Most potential retirees lack information about saving and investing for retirement. Many people don't plan ahead and take financial risks without realizing it.

Debt problems are serious for a large part of the population due to financial illiteracy. Young people are on average less financially capable than their elders.

🚀 What is the relationship between financial literacy and financial inclusion?

Financial education has a direct relationship with financial inclusion. As presented above, education makes it possible to take knowledge of certain existences. An example palpable is that many people do not know what is meant by Islamic finance.

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Yet it offers an alternative to conventional finance that is not very pro-poor in terms of financing.

Certain Islamic financing products allow bankers to finance Start-ups without them providing a guarantee or a Guarantee. Others, on the other hand, are called participation agreements, which allow the bank to participate in the capital of the new company.

In addition, many young people with ideas who do not have guarantees to benefit from traditional financing are aware of the existence of Crowdfunding.

By focusing on these two examples, we understand that financial inclusion cannot be achieved without in-depth financial education.

Financial education can benefit consumers of all ages and income levels.

For young adults who are just starting their working lives, it can provide basic tools for budgeting and saving so expenses and debt can be brought under control.

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Financial education can help families gain the discipline to save for their own home and/or for their children's studies.

It can help older workers ensure they have enough savings for a comfortable retirement by providing them with the information and skills to make wise investment choices within their individual retirement and savings plans.

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Financial education can help low-income people make the most of what they can save and help them avoid high costs charged for financial transactions by non-financial institutions.

🚀 Summary ...

In conclusion, we can say that the fight against financial exclusion and poverty must first go through financial education. Financial education promotes financial inclusion. Unfortunately, very few people know this.

The perished people really need knowledge. An in-depth financial education allows you to control your expenses, your income and especially your Investments.

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