Money management is a critical life skill. Those without it are often forced into a downward cycle of poverty and missed financial opportunity. Even minor setbacks can be devastating. The impoverished in developing countries are at an even greater disadvantage because of the general lack of financial education, fewer resources and challenging socio-economic conditions. Financial literacy education offers a powerful tool with the potential to help the poor escape poverty by building savings, growing assets and creating wealth.<\/p>\n
Saving money may seem straightforward; however, many at the base of the economic pyramid (BoP) are barely able to do so. What little money they do have is kept on their person or hidden within their household. Saving ![\"Financial](\"https:\/\/biznews.fiu.edu\/wp-content\/uploads\/2010\/09\/dollars.jpg\" "\\"Financial")
even a dollar or two per week can cultivate much needed savings habits. Core concepts such as saving money are the basic foundation for proactive financial planning. These practices will not only help consumers build savings, but also will further develop good money management habits enabling BoP consumers the rare opportunity to plan for their future.<\/p>\n
Still, some have raised concerns about the effectiveness of financial literacy education. Law professor Lauren E. Willis of Loyola Law School published a journal article titled \u201cAgainst Financial Literacy Education\u201d in November 2008, citing the lack of empirical support for the effectiveness of financial literacy education. In her report, she notes that the hours of study needed to obtain financial literacy is beyond the reach of most people, using as an example the complexities involved in evaluating a retirement plan. I agree: this would indeed be a cumbersome task for the non-expert. But this does not mean that ordinary consumers would not benefit with some form of basic financial literacy education.<\/p>\n
Progress is being made toward this goal.<\/em><\/p>\n Organizations such as the Institute for Financial Literacy (IFL) aim to promote effective financial literacy education in the United States. Similarly, the Consumer Financial Education Body in the United Kingdom <\/cite>seeks to help consumers understand financial services and to help them better manage their finances. Meanwhile, the Organization for Economic Co-operation and Development and the Reserve Bank of India have co-sponsored a financial literacy workshop in Bangalore, India with a focus on the implementation of a national financial literacy program.<\/p>\n The beneficiaries of financial literacy education are not the only ones who stand to prosper. There are opportunities buried in untapped markets for banks and financial service providers to offer the same basic services available to those in rich countries, re-designed for BoP markets. Financial service providers serving BoP markets are rewarded with profitable sources of income by tapping into these millions of potential clients, many of whom are using innovative means to establish micro-businesses to escape the poverty trap.<\/p>\n
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<\/a>Online financial planning is a new and innovative way to provide financial planning to consumers who typically do not have access to professional advice. According to the Wall Street Journal<\/em>, it is estimated that nearly 50 million U.S.-based consumers who could potentially benefit from professional financial advice lack access to these services. Imagine the need for these services, even in their most basic form, in developing nations. Technology-based solutions—such as cell phone banking—have the potential to make a connection with the rural poor. Banks do not find it profitable to establish branches in regions where the remote poor live. Cell phone bank accounts facilitate ease of deposits, thus avoiding long journeys to deliver cash, the need to conceal money within one\u2019s household or to incur expensive wire transfer charges.<\/p>\n