“A person either disciplines his finances or his finances disciplines him.”Orrin Woodward
India is now one of the key markets for global enterprises. Global Corporations look at India’s large population as an asset.
India is quickly becoming one of the world’s fastest-growing economies. We have progressed in technology and production capacity to a great extent, but the majority of Indian businesses fail due to financial mismanagement. Despite the fact that India’s adult literacy rate is 73.2 percent, only a small percentage of the population understands the importance of financial literacy.
Why is it important to be financially literate?
The fact that India lags behind other countries in terms of financial literacy is concerning. According to the latest survey, India houses around 20% of the world’s population, but only about 24% of the population understands basic financial concepts.
In Indian families, investment and savings decisions are typically made by senior members of the family, who are actually following the same old pattern, which is not suitable for current demands. This is one of the main reasons why many young people struggle to get started in their careers at a young age.
Financial literacy is essential because it provides us with the knowledge and skills we need to effectively manage our finances. Financial literacy enables a person to create a solid and viable investment strategy while protecting their assets and income.
The Rewards of a Financially Literate India
Small businesses in India have been facing a major challenge. Competition and a lack of debt management have harmed small manufacturing industries such as batteries, handicrafts, toys, tires, dairy products, and vegetable oil. After the agriculture sector, small and medium enterprises employ the most people in the country (around 11.10 crore). However, many businesses are forced to close, leaving workers jobless.
Small businesses also have limited knowledge of formal loan sources. 42.9 percent of the population borrows money from informal sources such as commission agents and money lenders.
These non-institutional lenders offer loans with high-interest rates. As a result of their inability to manage their finances, the businesses have fallen into a debt trap. Small businesses and their owners will be able to make informed decisions and take advantage of resources available to them if they have a strong financial education.
Investing Money Wisley
For the majority of people, saving and investing are alien concepts. The School curriculum contains limited information. Financial education is only taught to students interested in pursuing a career in the field.
Individuals in urban cities and metropolitan areas such as Mumbai and Delhi are unable to budget their spending. While investment in fixed assets has increased exponentially, there has been a major lack of financial planning in terms of life and health insurance. Rather than investing their money, most people accumulate large sums of cash at home.
As India grows and expands, a good financial education will become an asset for people, allowing them to earn more money.
Financial Literacy Among Students
There is no doubt that all students in Indian schools should receive financial education. The government has implemented policies to improve unsatisfactory literacy rates over time. All of the programs that have been started, however, have a fundamental flaw: they haven’t been implemented.
Financial education must begin at the grassroots level. There is a need for teachers to receive formal financial education training. Finances can be easily explained to students when they are taught using real-life examples. Financial illiteracy can be bridged with practical knowledge and the proper targeting of financial education programs.
Financial Literacy: The Way Forward
Individuals should be given relevant skills and knowledge at various levels to develop financial literacy in India. They should be able to put their knowledge and skills into practice. The following should be included in basic financial education knowledge:
- A thorough understanding of financial planning
- Financial product knowledge.
- Money management
- Management of Debt
- Understanding how to create effective investment strategies
- Credit card processes
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We can make better financial decisions if we are financially literate. It equips us with the knowledge and skills we need to effectively manage our finances, including budgeting, saving, borrowing, and investing. We’re in a better position to achieve our financial objectives and achieve financial stability.