Basic Financial Literacy

Financial Literacy

This module introduces you to the concept of financial literacy and financial education and their various aspects. In this module, you'll discover the transformative power of financial education in enhancing your financial well-being. You'll learn the significance of setting clear financial objectives and how financial knowledge can help you achieve 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 different meanings at different levels:

• At a personal level, it is called Personal Finance.
• At a corporate level, it is called Business Finance.
• At a government level, it is called Public Finance.

This module focuses on Personal Finance.

What is Financial Literacy?

Financial literacy is the skill and knowledge required to manage one's financial resources. Apart from helping you make prudent financial decisions, it also guides you in achieving your financial goals.

How Old Should One Be to Be Financially Literate?

Financial literacy does not require adulthood. It is based on common sense and can be taught from a young age. Developing good money-management habits early, such as handling pocket money wisely, lays a strong financial foundation.

As stated by Robert Kiyosaki, author of Rich Dad, Poor Dad:

“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 established, they become a lifestyle.

Are Financial Literacy and Financial Education the Same?

Financial Literacy means understanding money-related topics such as budgeting, saving, investing, and managing debt. It focuses on having the knowledge and skills to make informed financial decisions.

Financial Education is a broader concept that includes all activities and resources designed to help people improve their financial understanding and make better financial decisions. This may include school programs, workshops, seminars, workplace training, and educational resources from financial institutions.

Is Any Certification Required for Financial Education?

Apart from professional qualifications such as CA and CFA, individuals can pursue the NISM-Series-XVIII: Financial Education Certification Examination, which provides foundational knowledge in finance, stock markets, banking, insurance, and related areas.