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Budgeting has such a big impact on people’s lives, yet it’s a topic that is rarely discussed and it is still not part of the school curriculum.

In a recent episode of our podcast, Architects of Change, host Nina Mohanty chats with CEO of P.F.C., Sweden’s first neo bank, Kevin Albrecht and Conversation of Money founder and financial expert Peter Komolafe about the value of budgeting, saving, and investing and how we can teach those to future generations.

Financial literacy is a very popular topic at the moment. It feels like it's on everyone's lips and many are building businesses around it. But in short, when we're talking about financial literacy, we're talking about a set of skills that apply to one's personal financial management, budgeting, saving and investing, including even those pesky little things like tax.

As a consequence of raising gas prices, we're in the middle of a cost of living crisis and one of the biggest concerns people have is how to make their money go a little bit further. So with inflation at an all time high, it’s becoming increasingly clear that money management is at the core - and the foundation - of all financial well-being. People always wanted to understand the use of their money better, but now it’s become an essential priority.

“There's shame and stigma attached to the word debt,'' affirms Peter Komolafe, “throughout  my 20s and halfway through my 30s, I was in debt overdrafts, personal loans, credit cards, you name it. I had it. I think fundamentally, people need to understand the difference between good and bad, or toxic debt and if you have the basic foundation of budgeting in place early, you can avoid toxic debt later on.”

“There are ways for fintechs like Klarna, Affirm or AfterPay to be more transparent with customers compared to what we’ve been used to before they came onto the market,” says  Kevin Albrecht. “Some companies show the amount you're actually paying in fees instead of a percentage because it's really hard for anyone to understand what sixteen point seven percent interest rates are, but it's much easier understand that they need to pay back twenty five dollars per month.”

Clarity and education seem to be key factors in financial literacy. Surprisingly it's the small amounts that matter most because what you do with a small amount is creating a healthy habit. It could be as simple as understanding what’s coming in and what is going out, and then if you do have disposable income, investing or saving 10% of that is generally considered a healthy financial habit, or more plainly - a smart move.

“Any big skyscraper is built on solid foundations. Your budgeting is the solid foundation that allows you to move on and actually invest and do things that generate more income.” says Peter.  To which Kevin adds: “Today, financial advice is just a couple clicks away in an app versus going to a physical location the way it used to be done. These tools can bring inclusive financial advice to people”.

It seems that mental wellbeing is impacted by poor financial well-being. So those two things have a clear connection. And it starts early in life. Financial education is really important and yet it's altogether non-existent in school curricula everywhere. The fix to this financial education issue with our schools is a relatively easy one to fix by using fintech and technology to be able to deliver the curriculum in an engaging way for kids across different age groups and peer groups. But that needs governmental change. That's slightly harder.

Education and financial literacy can help people find the balance to live their lives the way you want to live it. Some people call it financial freedom, and the only path to attain it is through financial literacy.

Listen to the full episode, here.

We believe in the power of change, and with Architects of Change we bring you stories and hands-on advice from the most inspiring entrepreneurs, the greatest innovators and the serious up and comers, every two weeks on Wednesdays. Listen to the second season, here.

Find out more about banked, unbanked and underbanked in Money talks. You should listen from Mambu's Disruption Diaries report series.

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