Empowering School Children with Financial Literacy Education To Achieve Short Term And Long Term Goals.

Oct 10, 20243 min read

Only 24% of India's adult population possesses financial literacy”, the report claims pointing the need for financial literacy education for school children.

The Global Financial Literacy Excellence Center's report highlights that only 24% of India's adult population possesses financial literacy, marking it as the lowest among major emerging economies. This is attributed to a lack of awareness and formal training from an early age, both in educational settings and at home.

However, the absence of financial literacy exacerbates social inequality among the economically disadvantaged. A fundamental grasp of financial concepts is crucial for individuals to access and utilise financial services effectively.

Throughout the early 2000s, there has been a growing acknowledgment of the critical role of advancing financial literacy. The concept of elevating it as a national priority has been progressively gaining traction.

Financial Literacy Education for School Children — Financial Literacy Education in Schools

Financial Literacy in National Education Policy (NEP) 2020

According to a recent SEBI report, only 27% of adults and 16.7% of teenagers in India are financially literate. Recognising the need to develop financial aptitude from a young age, the National Education Policy (NEP) 2020 highlights the importance of financial education. Furthermore, the Central Board of Secondary Education (CBSE) has partnered with the National Payments Corporation of India (NPCI) to create a financial literacy curriculum for grade VI students, enabling them to understand fundamental financial concepts early on.

Life Skills 2.0 is set to transform higher education in India by emphasising both personal and professional excellence.
The University Grants Commission (UGC) has introduced a thorough Life Skills Curriculum for undergraduate students, in line with the National Education Policy (NEP) 2020, aiming to promote their overall development.

What Can Be The Impact Of Financial Literacy Education on Learners?

Individuals, particularly young people, struggle to manage their income, leading to an imbalance between consumption and savings. For most of the population, saving and investing are unfamiliar concepts. However, with a strong financial education, people can effectively manage their savings and investments.
It impacts individuals in the long term as they strive to purchase a home, fund their children's education, maintain budgetary balance, and save for retirement. These goals underscore the enduring significance of financial literacy.
It teaches them how to create a budget based on their daily income and expenses. With a budget in place, they can monitor their spending and regularly review their financial plan.

Financial Literacy Benefits for Short-term Goals:

Improves Budgeting Skills: Learners when involved in family financial decisions can create and stick to a budget, ensuring that the finances effectively managed and avoid unnecessary debt.

Effective Decision-making: With financial literacy, learners can make better choices about daily spending, saving, and investing.

Debt Management: Understanding interest rates and repayment strategies helps learners manage existing debts of their families and avoid high-interest loans which in return create inconveniences at home.

Better Savings: Learners can develop strategies to save money for immediate needs, emergencies, or short-term goals, such as planning for a trip or buying a new gadget.

Consumer Awareness: It equips learners with the skills to evaluate the value of goods and services, helping them make smarter purchasing decisions and avoid scams.

Financial Literacy Benefits for Long-term Goals:

Investment Knowledge: It provides the foundation for making informed investment choices, which can grow their wealth over time.

Long-Term Debt Avoidance: By understanding credit and loans, learners can avoid long-term debt traps and maintain a healthier financial status throughout their lives.

Building Personal / Family Wealth: Educated in financial principles, learners can take advantage of opportunities to build personal or family wealth through investments, property, or starting their own business.

Financial Independence: It builds financial independence, allowing the learners to achieve their personal and professional goals without relying on external financial support.

Retirement Planning: Learners can understand the importance of early and consistent retirement savings, leading to a more secure financial future for themselves.

Conclusion:

India is a rapidly growing economy, recognised globally for its young population and demographic divide. It offers significant contributions in terms of workforce, trade and investment opportunities, and a thriving consumer market.

A proper understanding of money management will enable children to make finance-related decisions in their daily lives without difficulties. Thorough knowledge of financial details will boost their confidence and make them less dependent on external individuals or institutions.

Financial skills can elevate the standard of living and contribute to overall growth. A labor force equipped with solid financial education can help reduce poverty to some extent. In summary, a financially savvy India would become a significant force on the global stage.