Key Concepts Financial Literacy and responsibility

Financial Literacy

1. Understanding Financial Literacy Financial literacy is the combined knowledge and skills required to make responsible and informed financial decisions that contribute to a sense of financial security and well-being. Knowledge of financial concepts like saving, investing, spending and borrowing is the foundation of financial literacy. In addition, understanding credit management, asset building and how to reduce debt and avoid scams is critical to a healthy financial life.

2. Lack of Financial Literacy and its Implications For example, some lenders charge interest rates of 3% per month, translating into 36% per annum or offer high return on investments such doubling the investments in span of 2-3 years. However, individuals without financial literacy, don’t realise these loans or investments are based on predatory practices .

3. Gender Gap in Financial Decision-Making The National Finance Olympiad 2023 report noted that barely 16.7% of school-going students in India had solid understanding of personal finances Barely 27% of adults and only 24% of adult women in India are deemed financially literate, as per the minimum financial literacy levels defined by the RBI

4. Key components of financial literacy Budgeting and Money Management Saving and Investing Debt Management Financial Institutions and Services Financial Planning and Goal Setting Consumer Awareness Understanding Financial Concepts