How can Engineers, Lawyers and Medical Doctors graduate and gain employment without being financially literate? Graduating with a degree from a reputable teaching institution is not a ticket to success, as many without degrees would have you think, it says you can learn, think and resolve problems, use initiative and in some cases, you can lead. Yet, these young professionals expect to enter an organization at management levels and receive management remuneration. While the reality is even after orientation programs, periods of internship and other in-house training courses, some of these professionals cannot reconcile or balance they personal debit or credit card statement, far more to appreciate their employer’s budgeted or financial statements.The ability to read and understand your employer’s financials, so as to judge for yourself the monetary strength and other priorities of the organization and what contribution can you, at this stage of your career, make towards the future success of this organization. It is the responsibility of each graduating professional, highly trained in one chosen discipline, to open themselves to, at the very least, basic budgeting practices used within the organization they have freely chosen to represent.
Curiosity itself should drive learning about deductions made from your salary; Union dues, Pension contributions, Group Health Plans, Mortgage subsidies, Meals and Travel allowances, Bonuses, National Insurance, Health Surcharge and of course, Taxes and what benefits will these deductions buy. Even before interviewing for a job, an investigation into the potential employer’s reputation and worth, history and legal status, its present leadership and its future plans, is necessary as a basis towards the acceptance of an employment contract. On the other hand, the potential employer must evaluate, more than your competence in your core discipline, but your ability or trainability to fit into the position and quickly bring benefits to the organization. Since the organization runs on money is it not obvious that it must be asked “Are you financially literate?”
Seeking help from knowledgeable persons is a good first step. Financials for non-finance managers, Accounting for dummies and many “how to” books and courses are widely available.
Personal & Family budgeting calls for estimating grocery (food, cleaning supplies, etc.) bills, utility bills and other living expenses which do not contribute to your net worth or savings. A general guideline is to only spend one-third of your salary for these expenses. So now you are left with approximately two-thirds of your pay on your income statement to further divide into short and long-term savings on your balance sheet. Money set aside in easy access interest earning accounts which can be used for emergencies is referred to as short-term savings. Long-term savings is not easily accessible and in most cases, it is not cash or in bank accounts, these could be vested interest in business (stocks and bonds), pension plans, annuities and other insurance products or even equity in real estate.
Money affects every aspect of life, learn about it.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
