“A good planning is half job done”
The term “financial literacy” broadly refers to the ability of knowing basic financial terms and understanding of financial statements.
Today`s financial world is highly complex when compared with that of a generation ago. forty years ago, a simple understanding of how to maintain a checking and savings account at local banks and savings institutions may have been sufficient Now, consumers, especially rural citizens must be able to differentiate between a wide range of financial products and services.
In a country like India, where people make mistakes of keeping their funds in unproductive areas like FD and savings account, spend lakhs of rupees in big functions, spend huge in education but fails to know the basic difference between savings and investment it becomes crucial to have financial knowledge.
According to reports, only 27% of people in India is aware of basic financial terms. Financially literacy assists an individual in making important financial decisions. There’s no risk in saying that “finance is the integral part of everyone’s day-to-day life”, be it a business house or an individual. Your hard-earned money is meant to increase in coming time, it is meant to serve you in the term of need. The most important benefit is that being a financial literate person prepares you and teaches you the art of making money make money for you.
Financially literacy includes components such as “Budget”, “debt”, “Taxation”, “Investment” and “Personal financial management”. It helps you to see a broader world of finance. It teaches you the strategies of managing your finance provide you with better investment avenues. The absence of this skill will lack you in strong foundation of decision making which includes, where to spend, how much to spend, how much to save, how to set a financial goal, how to plan strategies and put your funds in productive areas such as shares, bonds, mutual funds, commodities etc.
Mastering all these decisions will help you gain the financial stability and ace the finance game effectively and efficiently.
In India where there is increase in unemployment, poverty, unstable economic conditions it becomes very important to gain as much financial knowledge as possible and learn about terms like diversification, retirement planning, personal finance, SIP, etc.
Author : Homeflic Wegrow