Basic Financial Literacy

This module introduces you to the concept of financial literacy & financial education and its hues. 

In this module, you'll discover the transformative power of finance education in enhancing your financial well-being. We'll delve into the significance of establishing clear financial objectives and illustrate how gaining financial knowledge can pave the way to attaining them.

What is finance?

In simple words, Finance is money management.

It is the process of acquiring money and effectively using it over a period of time. The term finance has its own definition at various levels:

• At a personal level, it is called personal finance. 

• At the corporate level, it is business financing.

• At the government level, it is public financing.

In this module, we will discuss the Personal Finance level.

What is financial literacy?

Financial Literacy is the skill and knowledge required to manage one’s financial resources. Apart from making prudent decisions, financial literacy also guides you to achieve your financial goals.

How old should one be to be financially literate? 

Financial literacy does not require adulthood. It is a topic of common sense and you should be more interactive with this lesson, especially with your younger ones. Once you have laid a strong base and inculcated in them the entire ideology of managing money, say pocket money, your job is done.

As rightly said by Robert Kiyosaki, author of Rich Dad, Poor Dad (a popular book on Personal Finance):

“We were not taught financial literacy in school. It takes a lot of work and time to change your thinking and to become financially literate.”

Habits may take time to develop, but once done, they become a lifestyle.

Are Financial Literacy and Financial Education the same?

Financial literacy means knowing and understanding different money topics like budgeting, saving, investing, and handling debt. It's about having the smarts to make good money choices and understanding financial stuff like products and services.

Financial education is a broader term that includes all the stuff that helps people learn about money better and make smarter money decisions. This could include classes at school, workshops, talks, or information from workplaces or banks.

When we talk about financial education, is any certification required?

Apart from major degrees like CA and CFA, you can take the NISM-Series-XVIII: Financial Education Certification Examination, which will enhance your basics in the field of Finance, stock markets, banking and insurance and more.

Next, we will understand the importance of financial literacy.