Challenges and Solutions to Financial Equality

Financial equality refers to a situation where all individuals will get equal access to financial opportunities and will have enough resources to generate further wealth. Although the concept of equality may vary across different individuals, many common challenges stifle financial freedom and perpetuate inequality. It is therefore essential to identify and analyze the challenges and arrive at practical solutions.

Challenges Before Achieving Financial Equality

Financial equality is a step that requires crossing many challenges. Financial inequality in some places refers to the financial exclusion of the underprivileged and unbanked population. Most of these challenges have roots in the traditional financial system and this is why popularizing decentralized finance is the first step to promote it.  

Educational Qualification

Financial inequality usually becomes perpetual because of disparities in educational qualifications. It is true that in some cases, lesser educational qualification leads to lesser income and vice-versa. Therefore, many individuals seek higher education to earn higher incomes and break free from the shackles of perpetual financial inequality. 

Technological Advancements

Financial equality has a direct correlation with the level of technological progress in the world. Technologically advanced countries have higher levels of income and therefore have lower financial inequality. However, in recent times, technological innovations such as automation are causing job losses and widening already existing financial inequality.   

Taxation Policies

Financial equality becomes difficult to overcome due to different taxation policies of governments. It is a fact that higher income groups pay a higher percentage of their income as taxes, yet governments frame policies to ensure that they get rebates. Capital gains tax, corporate tax, and income tax benefits are often provided by the government to ensure more savings among higher-income earners. This leads to perpetual financial inequality. 

Ways to Attain Financial Equality 

Though financial inequality is a worldwide problem, it is not insurmountable. The potential of decentralized finance is enormous and it can lead to better financial inclusion. Once financial inclusion becomes more widespread, then there is a high possibility that it will lead to financial equality. The most common solutions to financial equality include the following.

Reduce Poverty Levels

Poverty is a leading barrier to financial equality. Sometimes, poverty leads to prolonged debt cycles and health issues. Therefore, many governments implement poverty alleviation programs to ensure that individuals have a steady stream of income to maintain a decent standard of living. 

Boost Economic Growth

Financial inequality thrives in places where economic growth is low. Low-growth economies typically have fewer income-earning opportunities and have mismanaged traditional financial systems. Therefore, decentralized finance is one way of boosting economic growth and increasing income opportunities. An increase in income-earning opportunities automatically leads to more investments, entrepreneurship, and higher savings.

Promote Digital Inclusion and Innovation

Digital inclusion and innovation are crucial to uplift underprivileged and unbanked populations from the shackles of traditional finance. These steps will lead to a broadening of the financial ecosystem and provide a proper channel for people to access financial services. All crypto platforms facilitate digital inclusion indirectly because blockchain technology makes transactions fast and international borders do not matter much.

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Conclusion

Financial equality will become a reality only if the credibility and accessibility of decentralized finance increase. The factors causing and widening already existing financial inequality include faulty economic policies, low economic growth, taxation policies, and technological advancement. The solutions to the growing challenges of financial equality include widespread digital inclusion and innovation. Therefore, removing income inequality requires both sustained effort and long-term planning.