"Financial Literacy is a Lifelong Journey of Learning that forms the Foundation of our Relationship with Money."
Financial literacy – it’s not just about knowing the difference between debit and credit cards! In India, where a significant portion of the population grapples with managing finances, financial literacy is the key to unlocking a secure and prosperous future. As per the survey in 2023, only 27% of the population is financially literate. This means that only one of four people knows about financial literacy.
According to The Standard & Poor’s Ratings Services Global Financial Literacy Survey, India was ranked at 121 out of a total 144 countries. India was ranked 24th from the bottom. Further, it lacks an understanding of the Basics of Financial Engagements.
What is Financial Literacy?
Financial literacy in India refers to the ability of individuals to understand and use various financial products, services, and concepts to make informed and effective financial decisions. Think of financial literacy as your financial compass. It empowers you with the knowledge, skills, and confidence to make informed decisions about your money. This includes budgeting, saving, investing, managing debt, and protecting yourself from financial fraud.
The Power of Financial Literacy for Consumers
Financial literacy isn’t a luxury; it’s a necessity. Here’s how it impacts you:
Informed Decisions: No more confusion! You’ll understand different financial products and services, allowing you to compare and choose the best options for your needs.
Debt Management: Say goodbye to overwhelming debt! Financial literacy equips you with tools to manage credit responsibly and avoid falling into debt traps.
Savings & Investments: Grow your wealth! You’ll learn how to save effectively and invest wisely to achieve your financial goals, be it a dream vacation or a comfortable retirement.
Financial Security: Peace of mind awaits! Financial literacy empowers you to plan for emergencies and unforeseen circumstances, building a financial safety net for yourself and your family.
Government's Push for Financial Literacy
Financial literacy in India is on the rise, driven by a surge of government initiatives. The Indian government recognizes the importance of financial literacy and therefore, has given detailed information about the initiatives taken by to make India financially literate:
National Centre for Financial Education (NCFE): Established collaboratively by RBI, SEBI, IRDA, and the government, the NCFE serves as the central agency for financial literacy initiatives in India. They develop educational material, conduct workshops and training programs, and even hold annual National Financial Literacy Assessment Tests to gauge progress.
Financial Literacy Weeks: Throughout the year, the government organises financial literacy weeks across the country. These weeks involve campaigns, seminars, and outreach programs aimed at raising awareness about various financial concepts like budgeting, saving, and investment options.
Integration into School Curriculum: Recognizing the importance of starting young, there’s a growing focus on integrating financial literacy into school curriculums. This equips students with the knowledge and skills to manage their finances responsibly from a young age.
Digital Initiatives: Leveraging technology, the government has launched online platforms and mobile apps that provide financial literacy resources and educational modules in multiple languages. This ensures wider accessibility, especially in remote areas.
These initiatives represent a multi-pronged approach to address the financial literacy gap in India. By combining classroom education, public awareness campaigns, and digital tools, the government is striving to empower Indian audiences to make informed financial decisions and achieve their financial goals.
These initiatives represent a multi-pronged approach to address the financial literacy gap in India. By combining classroom education, public awareness campaigns, and digital tools, the government is striving to empower Indian audiences to make informed financial decisions and achieve their financial goals.
Budgeting: The Cornerstone of Financial Literacy
Being financially literate means having the ability to create and adhere to a budget. It includes understanding income and expenses, saving for future needs, and managing debt responsibly. Budgeting skills are crucial for maintaining financial stability and achieving long-term financial objectives.
Budgeting is the foundation of financial literacy. It’s the process of creating a plan for your income and expenses. Here’s a breakdown:
Track Your Income: Know where your money comes from – salary, side hustles, etc.
Categorize Expenses: List your essential and non-essential expenses (rent, groceries, entertainment).
Allocate Funds: Divide your income amongst your expenses and savings goals.
Track Your Spending: Monitor your expenses against your plan and adjust as needed.
Managing Income vs. Expenses for a Brighter Future
Here are some budgeting tips for the common man:
Prioritize Needs: Ensure essential expenses like housing, food, and healthcare are covered first.
Limit Discretionary Spending: Be mindful of non-essential spending like dining out or entertainment.
Embrace Savings: Commit a portion of your income to savings, even if it’s a small amount initially.
Review Regularly: Revisit your budget periodically to adjust for changes in income or expenses.
Invest in Yourself with Simplifin (Super Investing App)
Now that you’re armed with financial literacy, take charge of your future! Consider using Simplifin (Super Investing App). Simplifin offer a user-friendly interface to set financial goals, get investment guidance, and invest in Mutual Funds, Fixed Deposits and Digital Gold – all strategically aligned with your budget and risk appetite.
Financial literacy is your key to unlocking a world of financial possibilities. Take the first step today – educate yourself, budget wisely, and invest for a brighter and more secure future!