Are Mandatory Laws Required To Shape Up Our Financial Health?

Financial discipline is a matter of personal choice. A person with good discipline may strive to live within his monetary means without any debts and make his finances grow at a healthy rate. A person with not a very impressive discipline may depend a lot on debt and will not know how to utilize and save his monetary resources. Financial discipline is not related to the amount of monetary resources that you have at your disposal. A person earning much less than you, can be more disciplined than you. Many affluent people were seen to spend all their resources unwisely and get into huge debts leading to their fleeing their homes to avoid repayment to their lenders! If financial behavior would have been strictly shaped by legislative initiatives, then some people might not have got the freedom to misuse their finances.

The recent recession and many other episodes of financial depression have made the governments of different countries to sit back and chew upon the idea of bridling the individual nature of financial discipline. They feel it should not be left to entirely to the individual alone. Take the example of the largest source of consumer debt – our dear old plastic money – yes I’m, talking about the uber-utilized credit card. Is there a limit on the number of credit cards that a person can own? In an age where the crediting business is flourishing well, crediting companies are vying with each other to get more and more clients. So here you have people with half a dozen credit cards with the total credit limit reaching up to more than their salaries can repay. This is the reason there are so many credit defaulters. Shouldn’t there be a check on the number of cards an individual can possess? Also shouldn’t the issuing of  credit cards be done by companies only after verifying the number of cards a prospective client already possess and his credit limit in those cards ?

Some countries, such as the UAE, have already started taking good measures in this direction. During this recession, they have stopped issuing money from their foreign ATMs, drastically curtailed the credit limits, and also stopped all lending practices under dire circumstances. The clients might have felt uncomfortable, but they couldn’t have taken better measures under such circumstances.

Making credit reporting mandatory is another way in which financial discipline can be encouraged. The action taken against financially undisciplined people might look very cruel to us, but that’s the only way they learn. Of course, the present economically lean period might have prompted people to take loans from institutions but even then you should be able to take only as much as you can repay.

Financial institutions along with government patronization are coming up with financial literacy and discipline programs for youth and children so that they learn proper financial etiquette and keep their financial health good. On the whole, I feel a bit of stringency and mandation in financial laws is required because we, as humans, have the tendency to learn some things under pressure and not out of free will.