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Financial Literacy For All: Bridging The Knowledge Gap For A Prosperous Tomorrow

Financial literacy has become a necessity in today's due to changing family structure and fast-developing technological advancement in banking and financial products

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By Sameer Bansal

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Financial literacy makes money management easy. People who understand money can better deal with their financial challenges, lead a financially stable life, and contribute to economic development. Studies show that lack of financial awareness can create issues in the day-to-day life and affect a person's overall well-being. The money related stress can lead to poor financial decisions and put one in to financial crises. That is where financial education comes in to empower people and improve their lives.

It includes skills such as budgeting, saving, investing, debt management, etc. In today's world, with complicated financial products and e-banking, understanding money is necessary.

Education Can Solve The Systemic Issue

Education can play a crucial role to improve financial literacy. Unfortunately, personal finance is not mandatory in schools and universities and hence many students remain financially unaware.

Indian teenagers often enter adulthood with little knowledge about managing money. There are so many reasons why there is this gap: outdated curricula, insufficiently trained teachers, inadequate resources, and cultural resistance to discussing money.

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If they do not learn budgeting, investing, and managing debt, most young people do not achieve financial independence. A solution to this could be that schools integrate real-life financial education in the curricula. The firsthand experience and data can be taken in partnership with banks and other financial organisations.

Real-world activities, like managing a simulated bank account, developing a savings plan, or understanding how insurance protects assets, can evoke and sustain the interest in financial literacy. The real-life experience integration with the curricula requires a combined effort from all stakeholders, including schools, government agencies, and NGOs.

In India, women are often overlooked when it comes to long-term financial planning despite their significant progress in various fields. While many women are great at managing household expenses, fewer are involved in making investment decisions, planning for retirement, or building wealth. This gap is largely due to a continued gender disparity in financial literacy.

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According to a 2020-21 survey by the National Centre for Financial Education (NCFE), only 21 per cent of Indian women are financially literate compared to 27 per cent of men. The India Ageing Report 2023 states that Indian women would mostly live longer than men, and therefore, it is imperative that they have good financial planning in order to ensure comfortable lives in their advanced age. Empowering women financially not only makes the individual stronger but also the family and community.

Financially educated women are more likely to save prudently for their families, and avoid exploitative practices due to better financial decision-making. An understanding of products like insurance, investment, and retirement plans can go a long way in securing their future and elevating their status in society.

Linguistic Diversity: A Double-Edged Sword

India's stunning linguistic diversity is a richness of culture but also a barrier to financial education. Although there are over 20 official languages and hundreds of dialects spoken across the country, most financial literacy material is mainly available in English or Hindi, disenfranchising the masses. It leaves a large section of people away from financial knowledge.

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Another issues is the content adaption to the regional languages. It is often done poorly leading to confusion and misunderstanding. A better way would be to develop quality content in multiple Indian languages. Simultaneously, fostering bilingualism, especially in English, has the potential to open up access to global financial tools and information, enabling individuals to make better-informed decisions.

Organisations like the National Centre for Financial Education (NCFE) and international organisations like the OECD provide resources on key topics like saving, budgeting, and credit management. Taking this initiative to the next level by implementing local language versions will make the initiative even more inclusive and will leave no one behind.

Towards A Financially Literate, Inclusive India

Financial literacy is not just for the wealthy, It is a vital skill for everyone. To promote inclusive growth, we need the combined efforts of schools, families, banks, and policymakers.

By enabling people to make good financial choices, we can build a more stable and better future. Financial literacy not only enables people with the skills to survive, but also with the skills needed to prosper, the key to building a better society.

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The author is the managing director and chief executive officer of PNB MetLife.

(Disclaimer: Views expressed are personal and do not reflect the official position or policy of Outlook Media Group and/or its employees. The article is for information purposes only; please consult your financial planner/s before investing.)

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