Running a sustainable business requires some level of financial education to understand your financial situation and make wise decisions. It is one of the most crucial business skills, yet often the most overlooked. To help SMEs improve their financial knowledge, here are a few tips governments can apply:
Financial Education in Schools
Teaching financial knowledge at a young age will significantly help students, regardless of their professions later on. According to ME Bank’s recent survey, 40% of Australian adults stated that they wished they were taught more about money when they were younger. Moreover, according to the Raiz research, 75% believed schools were not doing enough to teach necessary financial skills to their students. Students must learn how to create a budget, manage their debt, understand interest rates and taxes, and how these can affect their investments and retirement to be more financially stable later on in life.
Placements and Mentors
Someone who has experience in managing money and cash flow forecasting will be able to teach financial management skills in a way that books can’t. The world of finance can feel intimidating to an uninitiated person, so having a mentor to teach you the basic and practical skills you need to run your business will boost your confidence and help you tremendously. Governments should actively work with big corporations and even small and medium-sized enterprises (SMEs) to set up mentoring and placement opportunities.
Monitor and Review Commissions
A lot of what happens in finance can sound complex to an ordinary entrepreneur, but the repercussions are hard to ignore. The interconnected system of global finance also means that a crash or boom in one part of the world can affect someone’s ability to export there. Having a body that relays this information to SMEs in the simplest possible terms will help. A commission like this should also be responsible for setting up and reviewing financial education on a regular basis while also making it as diverse as possible to encourage financial inclusion.
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