What is Financial Literacy?

Being financially literate requires one to be able to understand the working or functioning of money.In other words, having the knowledge of management of money is the criteria for being financially literate .i.e. the way someone manages to earn money,the way he or she manages, invests and donates it.Financial literacy mainly focuses on personal financial matters.

Financial literacy makes one acquainted with the knowledge of decision making related to personal finance, like real estate, investment, saving, insurance etc. as well as overview of deep financial concepts like financial planning, time value of money, compound interest, capital market, money market, shares, bonds, debentures etc.

Financial literacy facilitates well financial decisions, which is good for an individual and his/her family as it brings substantial financial stability.In our country, most of the people are still financially illiterate and it leads to bad financial decisions, which in turn brings financial instability.So,the masses are needed to be made financially literate, and to bring this, certain major steps have been taken by our government in the recent past.e.g. financial literacy program is being offered online, by securities and Exchange Board of India.

This program has separate modules for different target groups of the society.They are;

• Financial Education part A
• Financial Education for School Children
• Financial Education for College Students
• Home Maker Module
• Executives Module
• Middle Income Group
• Investment Planning for Retired people
• Money maxims
• Sessions for School children

Moreover, the Reserve Bank of India has taken a leap forward in the very field of financial literacy by undertaking a project titled, “project financial literacy”.The objective of the project is to propagate information regarding the central bank and general banking concepts to various target groups, including school and college going children, women, rural and urban poor, defense personnel and senior citizens. The designing of  the project has been done in a such a way that, it will be implemented in two modules.In one module, the “Money Kumar” will make us well acquainted with the role and functions of the Reserve Bank of India, and in the other module, Raju will introduce us to banking concepts.

Financial literacy has been an issue of concern, internationally too.The Organization for Economic Cooperation and Development started and inter-governmental project in 2003, having the objective of providing way to improve financial education.An international gateway for financial education was launched in 2008, which aims to serve as a clearing house for financial literacy programs.At times, countries like Australia, New Zealand, Belgium, U.K, U.S.A etc. have kept taking steps to make their people all the more financially literate.

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