Why financial literacy is gaining importance as a new academic field

How to become a millionaire? -It’s a topic that’s often trending online, but many still don’t know how to manage their money. Thus, financial literacy among young people remains a challenge. The financial literacy rate of young Indian adults is only 27% according to the 2019 SEBI report. Data from the National Center of Financial Education (NCFE) Financial Literacy and Inclusion Survey 2019 indicates that only 24 % of rural respondents have financial knowledge, while the rate in the urban population is 33%. The female economic literacy rate is 21%, which is 8% less than the male literacy rate. “The survey serves as a pointer to show where rouserces need to be focused. Key rural and urban divide as well as gender gaps have been identified at the national as well as state level. collaborative efforts and resources with other organizations, we can bridge the gap,” said Satyajit Dwivedi, CEO of NCFE.

It is believed that the government, along with the financial sectors, ed-tech and fin-tech industries have begun to focus on the need for financial literacy. “Over the past two or three years, the growth and accessibility of financial services has increased thanks to the various fintech industries that have proliferated. In situations where young adults don’t fully understand certain terminologies, the risk factors of financial investing increase and they tend to start making mistakes,” said Mukund Rao, co-founder of Muvin, an app for pocket money for teenagers.

Highlighting the need for financial education and strategies to deliver it, the National Strategy for Financial Education (NSFE) 2020-2025 recommended the adaptation of the 5Cs approach, which includes a curriculum based on the financial education in schools, colleges and training organizations. The NSFE has also called for the integration of financial literacy as part of the school curriculum through various professional and vocational courses. According to Dwivedi, the NSFE, in collaboration with the National Council for Educational Research and Training (NCERT), aims to introduce financial literacy into the school curriculum. “Our main objective is to implement financial education through the program of the Central Council for Secondary Education (CBSE). We work with NCERT, once the process is completed it will automatically be included in all CBSE based schools that follow the NCERT curriculum. We are also in dialogue with the Ministry of Education. As the National Education Policy 2020 develops the National Curriculum Framework, the textbooks will be formulated. Some of the state boards have already adopted this into their textbooks. We are also in talks with Indian Councils of Certificate of Secondary Education (ICSE),” he added.

It is believed that financial literacy at a young age will help emerging investors understand risk factors. The contribution of micro, small and medium enterprises (MSMEs) to India’s GDP in 2020-2021 is around 30% according to the report of the Central Bureau of Statistics, which has been reduced by 0.5% from the value of 2019-2020. “Learning about money is perhaps one of the most important skills that should be taught at a young age. We discussed financial content with a few schools in advance,” said Junio ​​co-founder Shankar Nath. He also added that talking to the principals, many educational institutions showed strong interest in implementing the financial education courses for young people.

According to Dwivedi, the NCFE has mainly prepared a series of textbooks from grades six through 10 which includes banking, insurance, retirement system, among others. It is up to the institutions to decide how many they want to adopt. He also said the courses were prescribed as horizontal integration instead of financial education as a separate subject. “Financial education is a life skill. Knowledge of personal finance is extremely important. The majority of young people are unaware of the ten principles of financial literacy. We know the theory but not the practice when it comes to personal finance,” Diwvedi added.