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“Understanding money management is the first step toward financial freedom; ignorance is a barrier to success.” – Pavitra Walvekar (Kudos Finance)
Navigating the world of personal finance can often feel overwhelming, especially when faced with a mountain of bills and financial responsibilities. However, financial literacy is the key to managing these challenges effectively.
In simple words, it refers to the ability to make informed and effective decisions regarding your financial resources. This includes budgeting, saving, investing, and understanding credit. Being financially literate means you can create a budget that works for you and make smart investment choices without feeling lost or intimidated.
But why is financial literacy so important? Unless you have a hidden stash of cash or a wealthy relative ready to share their fortune (let’s face it, most of us don’t), understanding your finances is crucial. Financial literacy empowers you to make informed decisions, avoid the traps of credit card debt, and save for future goals—whether that’s a dream vacation or simply enjoying a nice dinner out without worrying about the bill.
In today’s complex financial landscape, where the financial jargon can be confusing, being financially literate is not just beneficial; it’s essential for successfully managing your future.
Let’s explore the vital role of financial literacy with Pavitra Walvekar, the Pune-based promoter-director of Kudos Finance and Investments Private Limited.
According to the NCFE Financial Literacy and Inclusion Survey 2019, financial literacy in India stands at a concerning 27%, indicating that a large segment of the population lacks essential financial knowledge and skills for effective money management. The survey also highlights significant regional disparities, with the West Zone leading at 37%, followed by the North-East Zone at 33%. In stark contrast, the East Zone has the lowest literacy rate, recorded at just 20%.
“The data is alarming: with only 27% of adults in India financially literate, it’s time we face the music and stop treating money like the awkward relative at family gatherings. Financial literacy isn’t just a personal concern; it’s a societal wake-up call! So, why not spice up those dinner table conversations with finance discussions?” says Pavitra Walvekar
“I view financial literacy as an essential life skill that somehow manages to slip through the cracks of our education system. While we’re busy mastering subjects like algebra and history, the art of managing our hard-earned income often gets left behind. To me, financial literacy means confidently navigating the investment landscape—knowing how to allocate funds across various investment assets and understanding what returns to expect.
“It’s about taking charge of your portfolio rather than just nodding along with whatever a policy agent suggests.
The money we earn from our jobs or businesses isn’t just meant to sit idly; it should be reinvested into income-generating assets. So, let’s ditch the outdated notion that money talk is taboo and embrace the idea that mastering our finances is not just smart—it’s downright necessary!” he adds.
Gone are the days of letting your money languish in a fixed deposit, where it barely keeps pace with inflation. Pavitra Walvekar believes, “We need to grasp how investing works and avoid the pitfall of massive debts, like buying a home before you’ve even mastered the art of budgeting. Education about loans is crucial; understanding their purpose can save you from financial headaches down the road.”
Taking out a loan and paying it off on time isn’t just a responsible move; it’s a savvy strategy for building your credit score. A solid credit score can unlock lower interest rates on future loans, making it feel like you’ve discovered a hidden treasure in the financial world.
It’s crucial for people to educate themselves about the equity market and shift their mindset away from the fear of investing in options beyond fixed deposits. When you invest in the stock market, you can potentially enjoy average growth rates of 10-12%, which significantly outpaces those lethargic fixed deposits. Embracing this knowledge can transform your financial future and help you make your money work harder for you.
However, things are improving as the Millennials and Gen-Z have turned the tide! India has reached a significant milestone with 10 crore registered stock market investors, according to the National Stock Exchange (NSE). The increase from 9 crore to 10 crore investors occurred in just five months, reflecting a remarkable surge in market participation.
This growth is attributed to factors such as rising digitization, enhanced investor awareness, and improved access to the markets, making investing more appealing to a broader audience. The rapid influx of new investors, particularly among the younger demographic, signals a transformative shift in India’s financial landscape.
Families and schools play a pivotal role in this journey; by incorporating financial knowledge into curriculum and everyday conversations, we can create an environment where financial education is prioritized.
There are numerous tax advantages that many people are blissfully unaware of—like hidden gems waiting to be discovered. It is only when people actively seek financial knowledge can they reap benefits. So let’s roll up our sleeves and dive into this financial adventure, because being financially savvy is no longer just an option; it’s a necessity!
