Financial Literacy: The need of the new era

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Realizing the power of financial literacy: A movement towards making a financially intelligent India

What does money means to you you ? What is it about a piece of paper that makes it so valuable ? Does having a lot of money makes you feel better? How much do you love money? Enough to die with money in your bank ? A lot of people die with a huge amount of savings in their banks. According to recent reports 42,270 crore of money is lying unclaimed in Indian banks. Why did they save up so much if they could not use it ?All this leads to a final question. Have you heard of Financial literacy? If yes , then where have you ? In this age of social media platforms and reality shows these words keep buzzing around . But have you ever gave it a thought?

Well, it is the ability to understand and effectively use various financial skills. At core it is about following the 5 principles which includes earning, saving, investing, spending and borrowing. Learning to strike a balance between oversaving and overspending is an important life skill. Here’s is the link which explains in detail these 5 principles.

Imagine, India a country with a literacy rate of 77.7% has only 27% of it’s population as financially literate. An economist named Alan Greenspan quoted ” The number one problem in today’s generation and economy is the lack of financial literacy” and it’s a fact that a significant amount of youth lacks basic financial knowledge. But where does the fault lies? Well, to find that out we’ll have to go back to our school classrooms , we are taught how to calculate interests and that sums up our financial knowledge. Unfortunately, we were not taught how to be financially literate. We deal with money related matters on a daily basis but how often in a day are we supposed to calculate the value of X ?

Lack of financial literacy is a global problem but countries like Finland, Sweden and a few others were able to recognize it’s importance and are in a pretty good spot now. These are also the countries to land up at the top of World’s happiness Index. Knowing your finances better helps you to become a confident and a more sufficient human being.

The one with a good financial knowledge will be more likely to generate wealth over a period of time .Today many students take high interest loans and spend most their salaries repaying debt . It has transformed into a viscous cycle of borrowing and repaying.

Beyond personal finances it also plays a very vital role in the world’s geopolitical and economic sphere. A country with a higher levels of financial literacy will tend to have greater economic output in the long run. The people there will be willing to put in the efforts to understand and spend money in an orderly manner while also managing it in a way that will help them grow and sustain in future.

A survey conducted recently revealed that about 72% of Indians are unaware of how much of their should be put aside to save , 76% said there is a need for some financial education and 51 % of the millennials said that their level of financial knowledge is holding them back from gaining financial stability.

NCFE ( National Centre for Financial Education), a non profit company by RBI, SEBI ,IRDAI and PERDA aims to promote Financial Education across India for all sections of the population as per the National strategy for Financial Education of Financial Stability and Development Council. They conduct seminars, workshops, conclaves, training, programmes, campaigns, discussion forums with/without fees by itself or with help of institutions, organisations and provide training in financial education and create financial education material in electronic or non-electronic formats in different languages. Link to few of their many materials provided are mentioned below.

In a fast paced world where financial decisions are at it’s peak learning and understanding the importance of financial literacy has become the need of the era. It’s high time that we focus on fixing the basics and start working at the grassroot level and to promote it collaboration between schools , government and the financial institutions is very important.

It will help people in understanding the basics , make progress and maintain a healthy credit score. It’s high time that all those fancy sounding words come out of the blue zone and becomes a part of our daily lives . And it’s true that it will take a lot of work and time to change our thinking and become financially literate but it all starts with initiating a conversation. By coming together we can ensure that our future generations are equipped with the tools and terminologies to succeed in this increasing changing financial landscape.