Importance of Financial Literacy in India

Importance of Financial Literacy in India

Financial literacy in India is still taboo for many of them, especially in regional sectors. Financial literacy refers to the skills and knowledge about finance that are used to make an informative decision while maintaining income and resources. Financial literacy allows a person to make a robust and viable investment plan, while preserving their resources and income.

It is alarming that the importance of financial literacy in India lags that of other countries. According to the survey, India accommodates around 20% of the population, yet only about 24% of the population is aware of basic finance

Need for Financial Literacy in India

The need for financial literacy to incorporate among everyone is now widely recognized by all stakeholders.

• Spreading awareness about financial products, such as bank accounts, to link new users to the financial sector.
• Educating the existing users of finance so they can make informed decisions.
• Keeping customers vigilant against risks and fraud.

Importance of Financial Literacy in India

A country like India still does not count financial literacy as a priority as other developed nations do. Lack of basic knowledge regarding finance results in poor or useless investments and inaccurate financial decisions. Therefore, many of them invest in short-term plans and physical assets to accomplish their goals, and do so in a way that has no benefits and does not enhance their economic standing. A lot of people opt for unsecured loans with the same intention, hoping that they will be beneficial. Unfortunately, they do not realize that what they think will be a benefit will actually turn into a nightmare. Unsecured loans like personal loans, credit cards, and education loans are the linking to debt.

It is indeed high time for a developing country like India to realize the importance of financial literacy. This poor financial literacy rate can prove to be a major setback to India’s ambition of becoming an economic superpower in the coming years.

Way Forward for Financial Literacy in India

To develop financial literacy in India, individuals should be imparted with relevant skills and knowledge at different levels. Ability and efficiency should enable them to put their knowledge and skills into practice. The basic knowledge about financial education should include:

• A robust understanding of financial planning
• Knowledge of financial products.
• Effective money management
• Debt Management
• Understanding effective investment plans
• Understanding the procedure of credit cards

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