CONTENTS

CHAPTER
ABSTRACT
INTODUCTION
MEANING
DEFINITION
NEED
OBJECTIVE
IMPORTANCE
LIMITATION
RESEARCH METHODOLOGY
LITERATURE REVIEW
PRATICAL
ANALYSIS AND INTERPRETITION
IMPACT
CONCLUSION
REFERENCE
DISCUSSION
ABSTRACT
Financial literacy has assumed greater importance in recent
years especially from 2002 as financial markets have
become increasingly complex and the common man finds it
very difficult to make informed decisions. Financial literacy is
considered an important adjunct for promoting financial
inclusion, financial development and ultimately financial
stability.
Financial development is widely recognized as an important
determinant of economic growth (Levine, 2005). It can be
argued that limited financial literacy serves as an important
barrier to demand for services: if individuals are not familiar
or comfortable with products, they will not demand them.
Financial Inclusion comes with potential dangers. Recent
experiences in the microfinance arena have shown that poor
people take loans that they have no capacity to service.
Farmers have also taken loans that they have not been able
to repay. Many have been driven to suicide because of debt
problems. Unless financial literacy goes hand in hand with
financial inclusion, instead of helping the poor, they will be
put into more trouble. Another example is the mortgage
crisis, in the U.S., which has lead to global crisis.
Financial Literacy can broadly be defined as the capacity to
have familiarity with and understanding of financial market
products, especially rewards and risks in order to make
informed choices. It refers to the ability to make informed
judgments and to take effective decisions regarding the use
and management of money. It is regarded as an important
requirement for functioning effectively in modern society.
Trends in retirement income policies, work patterns and
demography suggest its importance can only increase in the
years ahead. Raising financial literacy supports social
inclusion and enhances the wellbeing of the community. .
There is need for financial literacy in both the developed and
the developing countries alike. The increasing number and
complexity of financial products, the continuing shift in
responsibility for providing social security from governments
and financial institutions to individuals, and the growing
importance of individual retirement planning make it
imperative that financial literacy be provided to all in the
developed countries. In the developing countries financial
literacy can be seen as the first step toward alleviation of
poverty and development.
In India, the need for financial literacy is even greater
considering the low levels of literacy and the large section of
the population, which still remains out of the formal financial
set-up especially in the rural areas.
India is among the world’s most efficient financial markets in
terms of technology, regulation and systems. It also has one
of the highest savings rate in the world. While savings are
more in India, where the savings are invested is a cause for
concern. It is also to be noted that most Indians do not have
a regular savings habit also. Further only a minority of
Indians is covered by mandated, and/or government
financed social security schemes and social safety nets.
Wealth creation for the investor and the economy will remain
a distant dream, unless the common man becomes a wiser
investor and is protected from wrong doings. We need to
convert a country of savers into a nation of investors.
Everyone saves money for future needs but the approach
most of the time is to save surplus money without preparing
household budgets, without prioritizing personal financial
goals, without properly allocating investments in different
asset classes and without understanding the real rate of
return (after adjusting for inflation).
Investors tend to use thumb rules or seek advice from
friends and relatives. Most of the time these are poor
approximations compared to those that follow from a
systematic process. These results often in poor outcomes
and they lose faith in the financial sector.
Financial education primarily relates to personal finance,
which enables individuals to take effective action to improve
overall well-being and avoid distress in financial matters.
Hence improvement of financial knowledge of households is
necessary for them to participate continuously in financial
markets. Financial literacy plays a vital role in the efficient
allocation of household savings and the ability of individuals
to meet their financial goals.
Financial literacy thus goes beyond the provision of financial
information and advice. It is again a major issue for finance
markets as it both drives and distorts investment behavior. It
empowers the common person and thus reduces the burden
of protecting the common person from the elements of
market failure from a regulatory perspective
Financial literacy can make a difference not only in the
quality of life that individual scan afford, but also the integrity
and quality of markets. It can provide individuals with basic
tools for budgeting, help them to acquire the discipline to
save and thus, ensure that they can enjoy a dignified life
after retirement.
INTRODUCTION
The development and growth of the Indian economy and the
expansion of financial markets post industrial policy as a
result of liberalization, privatization and globalization have
resulted into tremendous growth of financial products as an
investment alternative or a credit one. The increasing
complexity and available choices of financial products, shift
of providing social security from government to individuals,
growing importance of planning for retirement have made it
compulsory to provide financial literacy at all levels for the
countries as the low level of financial literacy prevents
people making a judicious choice in regard to their financial
decisions and consequently render them incompetent to
select most appropriate investment alternative to beat the
prevalent inflation rate of economy.
In the developing countries provision of financial literacy
could be treated as first step towards alleviation of poverty
and development. In India it is although more important
because of large section of the population especially in the
rural areas which are deprived of formal financial set up.
India has world's best efficient financial markets in terms of
technology, system and its regulation. The policymakers and
academicians world over through various ongoing projects,
studies - academic and empirical, reports etc have
highlighted the importance of financial literacy as a core skill
necessary for participants operating in a complex financial
landscape. A higher level offinancial literacy of market
participants plays a complimentary role in helping afinancial
market achieve its primary function of mobilizing and
allocating the savings more effectively and efficiently. The
existence of larger number of financially literate participants,
investors and borrowers, enhances efficiency of financial
intermediation by letting them understand risk pooling and
risk sharing opportunities in a better way. A look at the level
of financial literacy in a particular economy provides a good
indicator of its economic growth and development prospects.
A step towards financial literacy is also a step towards
reducing poverty, alleviating standard of living and
increasing financial stability of an economy.
A global initiative was taken by the OECD to address the
issue of financial literacy by establishing the International
Gateway for Financial Education in March, 2008. The
Gateway serves as a clearinghouse for education and
awareness, containing information on financial education
programmers in more than 90 countries. The Consumer
Protection and Financial Literacy Project, another global
initiative was taken in 2010 by the World Bank with an aim of
helping a household in making correct choice about the
financial services as per the requirement.
In India, 'Project Financial Literacy' was started by RBI with
the aim of disseminating information regarding the central
bank and general banking concepts to various target groups
(discussed in details later in this chapter). Sanchayana is
India's first non-profit social venture which is dedicated
exclusively to financial literacy for the youth and adults.
Sanchayana conducts free workshops for the
underprivileged youth on topics ranging from the basics of
banking, credit cards and PAN cards to investing in shares
and mutual funds, so that these youth can become
financially aware and also a part of the mainstream banking
and financial services industry.
Financial literacy is of utmost importance for an individual
operating in a complex financial framework. The structure
and operation of financial systems world over have
undergone marked changes in the past few decades. At
present, India has world's most efficient financial markets in
terms of technology and systems. There have been
substantial regulatory, structural, institutional and operational
changes in our financial markets. The establishment of
 Securities and Exchange Board of India (SEBI), introduction
of nationwide s c reen based trading, dematerialization of
securities, electronic trading, sophisticated risk management
techniques, derivative trading, rolling settlement, shortening
of settlement cycle, and demutualization of Stock Exchanges
and many more have marked a new era in the functioning of
the Indian financial markets.
The term financial literacy can be defined as, Financial
literacy comprises of skills and knowledge that enables the
individual to understand, firstly, the principles of finance that
an individual requires to know to make informed financial
choices and decisions. Secondly, the financial products that
influence the financial well-being of an individual.

Steps taken in India to enhance financial literacy

A variety of steps has been taken in India in this area to

enhance financial literacy by many agencies, which
includes:

Initiatives taken by Reserve Bank of India (RBI)

The central bank of India, The reserve Bank of India is

continuously making efforts in the field of FL to increase
its level amongst the people of India.
 The project called, “Project finically literacy” has been
launched by RBI. This project deals with disseminating
information pertaining to central bank and its other banks
general banking concepts for the various target groups
including schools, children going to college, women,
urban and poor people, senior citizens etc. The mode of
information dissemination is through presentations,
pamphlets, websites, films, etc. Also has launched one
financial education site from November 2007 .This site
caters to the children as well as the women, rural and
urban poor, senior citizens. This site is primarily to
provide knowledge regarding basics of finance, banking
and central banking to children of all the age levels. It has
films on currency security and deals with familiarizing
school children on India's various currency notes through
one of their games section. The engagement of The
reserve bank of India through conducting exhibitions in
various parts of the nation is another highlighting feature
of its serious effort.

Other measures taken by Reserve Bank of India are:

Firstly, The Reserve Bank has directed all its leading banks
in each district to prepare a road map to ensure that all the
villages must have access to the financial services for a
village having population more than 2000, through a banking
outlet which may not necessarily be a banking branch.
Secondly, all the commercial banks including private sector
banks, public sector or foreign origin banks to prepare a
specic board approved plan to enhance financial literacy.
The Reserve Bank of India giving freedom to each and every
bank to prepare their own plan of action and not to impose
its own plan on other banks which should be consistent with
their line of strategy and comparative advantage, this in turn
will ensure better ownership.
MEANING
Financial Inclusion is a lofty ideal but Financial Literacy is the
first step towards achieving Financial Inclusion. Financial
Literacy can be seen as the demand side of Financial
Inclusion. It is considered an important adjunct for promoting
financial inclusion, financial development and ultimately
financial stability. It has assumed greater importance in
recent years especially from 2002 as financial markets have
become increasingly complex and the common man finds it
very difficult to make informed decisions.
Financial Inclusion comes with potential dangers. Recent
experiences in the microfinance arena have shown that poor
people take loans that they have no capacity to service.
Farmers have also taken loans that they have not been able
to repay. Many have been driven to suicide because of debt
problems. Unless financial literacy goes hand in hand with
financial inclusion, instead of helping the poor, they will be
put into more trouble. Other examples are the crisis of the
Tirupur exporters on currency derivatives, and the mortgage
crisis, in the U.S., which has lead to global crisis.
Financial literacy refers to the ability to make informed
judgments and to take effective decisions regarding the use
and management of money. It is regarded as an important
requirement for functioning effectively in modern society. It
enables a person to understand the importance of savings.
India is among the world’s most efficient financial markets in
terms of technology, regulation and systems. It also has one
of the highest savings rate in the world.
In spite of the same, India is still one of the poorest
countries in the world. While savings are more in India,
where the savings are invested is a cause for concern.
Wealth creation for the investor and the economy will
remain a distant dream, unless the common man becomes a
wiser investor and is protected from wrong doings. We need
to convert a country of savers into a nation of investors.
Financial literacy can make a difference not only in the
quality of life that individuals can afford, but also the integrity
and quality of markets. It can provide individuals with basic
tools for budgeting, help them to acquire the discipline to
save and thus, ensure that they can enjoy a dignified life
after retirement.
In India, the need for financial literacy is even greater
considering the low levels of literacy and the large section of
the population, which still remains out of the formal financial
set-up especially in the rural areas. Unfortunately it is a fact
that even graduates in India are not really financially literate.
Wealth creation for the investor and the economy will remain
a distant dream, unless the common man becomes a wiser
investor and is protected from wrong doings. We need to
convert a country of savers into a nation of investors.
Financially educated consumers, in turn, can benefit the
economy by encouraging genuine competition, forcing the
service providers to innovate and improve their levels of
efficiency. Government of India through its various agencies
like RBI, SEBI, NABARD, State Bank of India etc have been
trying to give financial literacy and financial education to its
citizens in the last few years. There has been plethora of
talks in this direction. But are we really walking the talk
This paper would look into various aspects of financial
literacy in India and why it has not succeeded. It will also try
to provide a suitable model that would be helpful for Indian
conditions.
DEFINITION
The conceptual definition of financial literacy is complicated
since scholars and financial experts have long disagreed on
how to define this concept. For the first time, Jump Start
Coalition for Personal Financial Literacy in its inauguration in
1997 championed financial literacy as a construct (Hastings
et al, 2012). However, prior to that, the idea dates to the
early 1900s with the advent of consumer education research
and initiatives which began in the United States (Jelley
1958). General literacy refers to a person’s ability to read
and write (Zarcadoolas, Pleasant, and Greer 2006) but the
most general definition Of financial literacy is pointed to a
person’s competence in money management. Indeed, the
standard definition of literacy developed by the Literacy
Definition Committee and used bythe National Adult Literacy
Survey is “using printed and written information to function in
society, to achieve one’s goals, and to develop one’s
knowledge and potential” (Kirsch et al. 2001, p. 3). Based
upon a review of research studies the many conceptual
definitions of financial literacy fall into four categories:
knowledge of financial concepts, ability in managing
personal finances, skill in making financial decisions and
confidence in future financial planning (Remund, D. L, 2010).
It is worth mentioning that numerous scholars who have
published studies about financial literacy have not plainly
defined this
concept (Chen and Volpe 2002; Meier and Sprenger 2007;
Morton, 2005; Servon and Kaestner 2008).
NEED OF FINANCIAL LITERACY

With more research highlighting the consequences of not

knowing how to manage personal finances, the need for
financial literacy is becoming glaringly obvious. The right
people are beginning to take notice and act, but more needs
to be done. The faster public awareness spreads, the more
people will speak out, causing the financial literacy
movement to finally take hold. When policy makers and
educators realize the critical importance of financial
education and fully understand the need for financial literacy,
programs and initiatives will pop up everywhere and we will
become a nation of financially savvy individuals.

The behavior-molding we cite below shows what is possible

when financial literacy is done properly. People who have a
solid knowledge of financial matters are able to more
accurately discern different financial decisions and make the
right choices aligned with their long-term goals. Individuals
who are just entering the workforce and have not thought
about the end of their career, for example, may realize the
importance of saving for retirement early and open a 401(k)
plan. A poorly made program will be one that may improve
knowledge, but does not prompt any behavioral change.

The President’s Advisory Council on Financial Capability

urges financial programs to leverage technology in order to
educate a generation that actively utilizes technology to
learn. Teachers can incorporate games and apps into the
classroom to facilitate learning and engage students
(Department of the Treasury).

The Federal Reserve Board’s Division of Consumer and

Community Affairs stresses that delivery of information must
be presented at an opportune time, when consumers are
most likely to retain information. First-time home buyers
would be receptive to pre-purchase counseling, for example
(Federal Reserve).
RESEARCH OBJECTIVES
The present study aims to measure financial literacy level of
people of Delhi. For the fulfillment of the study following
objectives are formed To measure the financial literacy of
people of Delhi. To study the association between levels of
financial literacy and demographic and socio-economic
factors
F-LAB India promotes Financial Literacy in the country by
actively engaging with all the stake holders including the
Government, Regulators, Educational Institutes, Training
Providers, Financial Services Companies, Banks, etc.
The main objective of F-LAB India is to promote Financial
Literacy “to create a Financially Aware and Empowered
India”. Further, American Academy of Financial
Management India in association with Partner Organizations
organizes “Financial Literacy” and “Investor Awareness”
workshops across the country helping F-LAB India to
participate in educating the investors and promoting the
financial literacy at mass level.
This effort will bear fruit in increased awareness amongst the
investors and financial advisors through long-term
relationship of such knowledgeable investors and
intermediaries leading to the national growth and investors’
protection.
To create awareness and educate consumers on access to
financial services, to educate the public or investors on the
Financial Literacy, to protect the interest of the investors, to
create awareness on availability of various types of Financial
Products and their features, provide necessary infrastructure
for public or investors to develop the necessary skills and
knowledge to become financially literate, to change attitudes
to translate knowledge into behaviour, to provide aid and
assistance to public or investors to develop and maintain
appropriate standards of competence for financial education
and literacy through examination and continuing education,
and to make consumers understand their rights and
responsibilities as clients’ of financial services.
To create a financially aware and empowered India, to
undertake massive Financial Education campaign to help
people manage money more effectively to achieve financial
well being by ensuring access to appropriate financial
products and services through fair and transparent
machinery for consumer protection and help in grievance
redressal.
To conduct financial education campaigns across the
country for all sections of the population along with
awareness campaigns at different levels for existing and
potential customers so as to improve their knowledge,
understanding, skills and competence in managing money
effectively and to help them improve their socio-economic
financial status by taking informed decisions.
To work towards an Inclusive Growth, Financial Inclusion
and Financial Education, to develop the knowledge and skill
of all the stakeholders to take informed decision, to promote
entrepreneurship, to conduct the conduct various Financial
Education trainings through trained/certified trainers/persons
in a format suitable to each target group with the content that
has been developed by rigorous research
To develop and maintain the appropriate standards of
competence for wealth management, risk management,
investment advisory, project management and financial
planning/ analysis through examination and continuing
education, financial planning/ analysis, provide necessary
infrastructure for public or members to develop the
necessary skills and knowledge to become successful
Wealth Managers, Risk Managers, Investment Advisors,
Financial Planners, Project Managers, Financial Analyst etc.
IMPORTANT
It helps in improving the financial knowledge of
individuals. It brings clarity on basic financial concepts
and principles such as compound interest, debt
management, financial planning etc. It enables you to
manage your personal finances efficiently. It helps in
making appropriate financial decisions about investing,
saving, insurance, managing debts, buying a house,
child education, retirement planning etc. It helps
individuals to achieve financial stability and financial
freedom. It helps in understanding the difference
between assets and liabilities. It helps in developing the
skill sets required for better financial planning and
managing your money. It provides in-depth knowledge
on financial education and strategies which are
indispensable for achieving financial growth and
success. It helps you in generating, managing, saving,
spending and investing money. It enables you to be
debt free by inculcating financial knowledge and debt
strategies.
fience, we need to put our conscious effort in improving
our financial knowledge and should also impart financial
education to our children as they are the future. The
government should also take initiatives to make
financial education compulsory in schools and colleges.
The government should run campaigns to educate
people about the importance of financial literacy in
everyone’s life. Government bodies, banks, insurance
companies and financial institutions should take
necessary measures to educate people about various
financial concepts and investment opportunities so that
people can live a financially stable life. Financial
stability and financial inclusion are two key aspects of a
growing economy. In India, there is an enormous
opportunity to provide financial literacy to all sections of
society. The first priority is to reach out to the
uneducated, poor and economically backward people
with limited access to the financial world, who
constitutes the major chunk of the society. They should
be given free financial education about basic financial
concepts. They should be trained on how to generate
money, the best ways to save money and where to
invest their money to get maximum returns.
LIMITATION
As banks are the gateway to the most basic form of financial
services, banking inclusion/ exclusion are most often used
as analogous to financial inclusion/exclusion.9 The study
primarily takes into consideration banking inclusion as
financial inclusion.
The study covers individuals only and does not cover
households and firms.
The study covers secondary data pertaining to the
Scheduled Commercial Bank.
The branch manager or the head of a bank branch has
been considered as representative of the branch.
The study suffers from dearth of published information on
urban Financial Inclusion. The study is subject to common
limitations of sample survey
RESEARCH METHODOLOGY
Research approach and sampling
The study was conducted in the positivist paradigm and
was quantitative in nature. A cross-sectional study was
conducted and data were collected once-off by means
of a structured questionnaire. Quota purposive
sampling was used to select the sample of students at
one university. This was done to have a representive
sample of repondents that would be able to provide
input on the research question, focusing on a university
where there is a lack of residences. This sampling
method allowed for the inclusion of students studying
towards a qualification in commerce fields (B.Com) and
those studying towards a qualification in non
commerce- related fields. Data were collected from
mostly first-, second- and third-year students. A total of
450 questionnaires were distributed and the responses
consisted of 300 students, providing for a response rate
of 66,7%.
Instrument
An existing questionnaire of Louw (2009), measuring
financial literacy, was adapted to collect the data. The
first section included questions soliciting demographic
 data from the participants and background information
about their financial life and the final section evaluated
the students’ financial literacy. The questions adressed
all the content elements identified by Louw (2009).
Students had to indicate “yes”, “no” or “don’t know” to a
set of 43 questions. In order to determine initial content
validity of the questionnaire, two statisticians were
requested to provide insight into the questionnaire. The
questionnaire had a Cronbach’s alpha for the financial
literacy test of 0.829. This is even higher than the
Cronbach’s alpha of 0.738, which was reported by
Louw (2009). According to Salkind (2012), a correlation
coefficient of between 0.8 and 1.00 may be regarded as
a very strong indication of internal consistency
reliability.
Data collection and analysis
The questionnaire was distributed during scheduled
contact sessions by selected lecturers. The primary
data generated from the questionnaire were analysed
by a statistician using the SPSS statistical package.
Descriptive statistical techniques included frequencies,
measures of central tendency, standard deviations and
correlations. The Mann-Whitney U test and Kruskal-
 Wallis test were performed to compare results for the
biographical variables.
Ethical considerations
Permission was obtained from the university to conduct
the study. An application for ethical clearance was
submitted to the institution that supervised the study
and permission was granted. All the participants were
informed about the purpose of the study and that they
participated voluntarily. Signed informed consent was
obtained from each participant in the study. The
students did not receive any remuneration for
participating in this study. No results of a single
individual are made available and responses of
individuals were treated as confidential.
LITERATURE REVIEW
Chen and Volpe (2002), Gender differences in personal
financial Literacy among college students, the survey was
conducted on 1800 students from fourteen universities of
U.S., out of which 924 useable responses were collected.
The study attempted to examine financial literacy among
college students by determining their personal finance
knowledge in the areas of general knowledge of personal
finance, savings & borrowings, insurance and investment.
The results suggested that women generally were less
knowledge about personal finance as compare to male
counterparts. Gender differences remained significant
statistically even after controlling other factors like class
rank, work experience and age. Also noted that
participants financial literacy was related to the education
and experience. ANZ Bank, Roy Morgan Research
(2003), the first national survey Was conducted in
Australia on financial literacy on behalf of ANZ
Bank (RMR,2003). A telephonic survey of 3,548 adults
and of 202 people detailed survey of around one to one
half an hour rigorous interview which included a self
component. The telephonic Survey had 145 questions of
finance and 25 questions about demographic profile. The
prime objective of the study was to examine the
knowledge against an individual's needs and
circumstances and that's why all the respondents were not
required to ask all the same questions. The tools such as
correlation, percentage method and averages were used
to summarize results .The results showed that overall
Australians society is financially literate but certain groups
were found to have challenges that need to be addressed.
These were groups which were identified as having lower
education level, unskilled workers, those with household
income level lesser than $20,000, people of two extreme
age groups as 18-24 years old and those above 70 years.
The section of respondents in the highest financial zone
were males. Hence the respondents although were tested
on the issues relevant to their current circumstances,
despite this a strong correlation was found between
financial literacy and socio-economic status.

Anna-Maria Lusardi (2008) , the study showed that

financial illiteracy is widespread among the U.S.
population and specifically acute among some specifically
demographic groups, like those with low level of
education, women, African-Americans, and Hispanics.
Also, almost half of older workers did not know which type
of pensions they had and the large majority of workers
knew little about the rules governing Social Security
benefits Notwithstanding the lowered literacy levels that
many individuals displayed, very few were depending on
the help of experts or financial advisors to made saving
and investment decisions. Low level of literacy and lack of
information affect the ability to save and to secure a
comfortable retirement, ignorance about basic financial
concepts can be attributed to lack of retirement planning
and lack of wealth. Financial education programs can
contribute towards improving saving and financial
decision-making, but much more can be done to improve
the effectiveness of these programs. Lusardi, A., Mitchell,
O. S., and Curto, V. (2010), they investigated to define
financial knowledge as financial literacy, attempted to
study the young group in U.S and collected the data using
National Longitudinal Survey of Youth in 2007-08. The
questions were framed to obtain answers pertaining
readiness of the young ones to take sound financial
decisions, affecting determinants of financial literacy in
young ones and the policy initiatives required to enhance
the young ones financial literacy. It was found that
financial literacy is low, less than one-third of young adults
possess basic knowledge of interest rates, inflation, and
risk diversication. Also stated that financial literacy was
strongly related to socio demographic characteristics and
_financial sophistication of family. Sobhesh Kumar
Agarwalla et.al , (2012), conducted a survey named “A
Survey of Financial Literacy among Students, Young
Employees and the Retired in India” .The study attempted
to examine the financial literacy level of three important
demographic groups namely young working adults, retired
and students in India. A sample of 2,967 was taken, out of
which 1001 were students, 983 were employees and 983
were retired. It was found that basic principles of money
matter and household finance such as compound interest,
inflation rate impact on returns and prices and the
diversi_cation roles are not well understood. The financial
behavior of Indians was found positive. The score of
employed and retires were high .The retires and employed
borrowed less and were dependent on their savings. The
found positive financial behavior was appeared to be
associated with higher financial knowledge. Men were
compared to women more financially knowledge able.
Agarwalla, Soothes Kumar; Barua, Samir K.; Jacob,
Joshy; Varma, Jayanth R. (2013), the study on financial
literacy among working young in urban India investigated
the influence of various socio demographic
factors on different dimensions of financial literacy
among the working urban youth in India and studied the
relationship between the different dimensions of financial
literacy in India. The attributes on which data was
collected were gender, age, level of education, marital
status, and family income, financial decision making
process and budgeting of expenditure. The study
conformed the influence of socio-demographic attributes
on financial literacy.
PRATICAL STUDY
A Practical Evaluation of an Adult Financial Literacy
Programme
An analysis of the qualitative and quantitative data reveals that
the Money Minded programme was viewed by participants in a
positive light. Whilst workshop participants came from a variety of
backgrounds and possessed differing levels of financial literacy,
the majority reported deriving benefit from the programme and
being satisfied with the topics. The first and second null
hypotheses – “participants did not receive any benefit from the
programme” and “participants were not satisfied with the topics”,
respectively – were both rejected. The third null hypothesis –
participants were not satisfied with the programme overall – was
tested using discriminant analysis. Only two of eight predictor
variables were significant discriminators: the workshop presenter
and the main language of workshop participants. Surprisingly,
none of the other hypothesised predictors, which included age,
gender, income, level of education and technical literacy, was
significant in distinguishing between those satisfied and those not
satisfied with the programme. With respect to “the presenter”, the
workshops presented by one of the older male presenters
recorded the highest level of dissatisfaction with Money Minded,
whilst the workshop presented by a younger female presenter
recorded the lowest level of dissatisfaction. With respect to “main
language”, those workshop participants who usually speak in a
language other than English recorded the highest level of
dissatisfaction. Hence, there has been revealed a gender effect
and a language effect in the perceived value of the MoneyMinded
programme. Overall, the Money Minded programme is viewed
favourably by participants but consideration needs to be given to
its presentation.
Analysis And Interpretation
Even though financial literacy is crucial to successful
“adulting,” a mere 17 states require high school students
to take a course on financial literacy. These courses have
proven to have a direct impact on a student’s ability to
make wise financial decisions. Plus, students who have
some personal finance classes under their belts are much
more likely to successfully save money, budget wisely and
invest smarter. Perhaps we should reevaluate how we’re
educating students (or not educating students) on these
important life aspects. Until that change happens, though,
here are the five key concepts to work on in order to
improve your financial literacy. Mastering these aspects
won’t always be easy but, with a little bit of practice, will
benefit you for a lifetime.
The Basics of Budgeting Creating and maintaining a
budget is one of the most basic aspects of staying on top
of your finances. In this modern day, it’s easier than ever
to create a budget with the help of websites and apps,
such as Mint.com. It doesn’t matter if math isn’t your
strong suit - thanks to these user-friendly tools, everyone
can get help with keeping their finances on track. And,
when utilized properly, they'll keep you in the know about
where your money is actually going. Without following a
budget, it’s difficult to hold yourself accountable on where
your money is coming from and what it’s going toward, so
mastering the basics of budgeting is where any financial
novice should begin. Understanding Interest RatesWhile
you may touch upon the concepts within a mathematics
course, it’s important to understand different aspects, like
compound interest. Why? Not only can it help you save
even more, but it can make the difference between
borrowing a small amount and paying back much more
than you need to for years to come. Understanding the ins
and outs of interest can impact your finances more than
you likely realize, so it’s an important concept to gain a
better understand of early on in life.
Prioritizing Saving Obviously, saving is an important
aspects of maintaining a healthy financial situation. But,
the majority of students don’t prioritize this aspect as
much as they should. It’s easy to ignore things like
retirement since it seems so far off in the future.
Learning to save early on can help you gain the
knowledge, practice and set of skills you’ll utilize
throughout your entire life. Beginners can start working
on this concept in the simplest sense, like saving
money for a higher-ticket item they desire. Working
toward a goal is key here and students need to
understand that there’s a lot of value in paying yourself
first – because the bills will always be there. Having
peace of mind? Well, that comes with practice,
diligence and patience, all qualities you’ll develop when
mastering your savings skill set.Credit-Debt Cycle
Traps Meaning: it’s much easier to lose credit than gain
it and many students don’t realize how easy it is to ruin
their credit – and how difficult it can be to regain credit –
before it’s too late. That’s why it’s crucial to provide
knowledge on debt earlier than later. Credit can be an
extremely useful tool – if it’s managed correctly. Making
rash decisions when you’re young can end up costing
you throughout adulthood so it’s important to grasp the
concepts and tools behind responsible credit practices
as early on as possible.
Identity Theft Issues & Safety In this modern day and
age, identity theft is more prevalent than ever. Since
everything is digital and just about everyone has
shopped online at one point or another, your financial
information is more vulnerable to fraud. Understanding
this concept, along with preventative measures, like
password protection and limiting the amount of
information shared online can be the key to maintaining
safe accounts or, inversely, can lead to financial ruin.
While it’s not a fool proof science (people can be safe
and things do still happen) it’s important to safeguard
your finances as best as possible to avoid the threats
that exist.
IMPACT
Empowering individuals with the knowledge of financial
literacy will have a dramatic impact on societies and
entire nations. The impact of financial literacy can no
longer be ignored. It is up to policy makers, educators
and people with sufficient private equity, to make
financial literacy a priority in our society. As awareness
spreads and people make their voices heard, the
impact of this skill set will no longer be overlooked.
Education in financial literacy will become ubiquitous
and these critical life skills will become the norm. The
positive impact of financial literacy is undeniable and
the sooner this movement spreads, the better off
everyone will be.
Conclusion:
Financial literacy is the ability of the individual to make
appropriate financial decisions
personally. The ability includes understanding the
investment products, financial
concepts, discussing the financial problems, making choices
between managing, spending
and saving money and responding to the current reforms in
financial market. The
sophisticated financial markets offer continuously new
investment products in the
market. The increase in the level of financial literacy will also
result in the financial inclusion which is the need of the
present Indian economy. Apart from looking at the lucrative
promises on return, the investor should analyse the basic
function, mechanism of the product and satisfy that the
product has met the mandatory compliances. The investor
should also self justify that his personal factors are weighed
while investing in an investment product. It is also necessary
for investors to know the risk associated with their
investment avenue during the different phases of economic
situation. The preferences made by the investors among the
six avenues and the opinion of the experts are compared.
The avenues are ranked in their order of importance based
on security of principal, liquidity, stability of return, capital
appreciation, inflation resistant factor, tax benefit and
concealability. The result shows that the experts and the
individual investors prefer the six investment avenues
comparatively in same position saving ratio of the world.
References
Asarta, Hill, and Meszaros, 2014. "The features and effectiveness
of the Keys to Financial Success curriculum." International
Review of Economics
Education. http://nebula.wsimg.com/7c3014715076f-
1f6a49caa6f4b6af123?AccessKeyId=27E1C5C94AE9959DA340
&disposition=0&alloworigin=1.

Assets and Education Initiative. (2013). "Building Expectations,

Delivering Results: Asset-Based Financial Aid and the Future of
Higher Education." In W. Elliott (Ed.), Biannual report on the
assets and education field. Lawrence, KS: Assets and Education
Initiative (AEDI). https://about.bankofamerica.com/assets/
pdf/BOA_BMH_2016-REPORT-v5.pdf.

Bank of America/USA TODAY Better Money Habits Report, Fall

2016. "Young Americans &
Money." https://about.bankofamerica.com/assets/pdf/BOA_BMH_
2016-REPORT-v5.pdf.

Brown, Collins, Schmeiser and Urban, 2014. "State Mandated

Financial Education and the Credit Behavior of Young Adults."
Federal Reserve Board, Divisions of Research & Statistics and
Monetary
Affairs. https://www.federalreserve.gov/pubs/feds/2014/201468/20
1468pap.pdf.

Center for Financial Literacy, Champlain College, 2011. "Financial

Literacy Education in Vermont High Schools: A
Snapshot." https://www.champlain.edu/centers-of-
excellence/center-for-financial-literacy/ cfl-resources/financial-
literacy-education-in-vermont-high-schools.

Center for Financial Literacy, Champlain College, 2016. "2016

National Report Card Adult Financial
Literacy." https://www.champlain.edu/centers-of-
excellence/center-for-financial-literacy/national-report-card-on-
adult-financial-literacy.

Center for Financial Literacy, Champlain College, 2013 "2013

National Report Card on State Efforts to Improve Financial
Literacy in High Schools." https://www.champlain.edu/centers-of-
excellence/ center-for-financial-literacy/report-making-the-
grade/2013-national-report-card.

Center for Financial Literacy, Champlain College, 2015. "2015

National Report Card on State Efforts to Improve Financial
Literacy in High Schools." https://www.champlain.edu/centers-of-
excellence/ center-for-financial-literacy/report-making-the-
grade/2015-national-report-card.

Center for Financial Literacy, Champlain College, 2015. "Prepped

for Success, A Study of Teacher Training, Financial Literacy &
Classroom Outcomes." https://www.champlain.edu/centers-of-
excellence/center-for-financial-literacy/report-prepped-for-
success.

Consumer Financial Protection Bureau, 2015. "Advancing K-12

Financial Education: A Guide for
Policymakers." http://files.consumerfinance.gov/f/201504_cfpb_ad
vancing-k-12-financial-education-a-guide-for-policymakers.pdf.

Consumer Financial Protection Bureau, 2017 "A Guide for

Advancing K-12 Financial
Education." https://s3.amazonaws.com/files.consumerfinance.gov
/f/documents/201703_cfpb_StateEngagementProject.pdf.

Council for Economic Education, 2013. "National Standards for

Financial Literacy." http://councilforeconed.org/resource/national-
standards-for-financial-
literacy/#sthash.1h8qxf0u.sQ8d6UPH.dpbs.
Council for Economic Education, 2016. "2016 Survey of the
States." https://www.councilforeconed.org/wp-
content/uploads/2014/02/2014-Survey-of-the-States.pdf

FINRA Foundation, 2016. "National Financial Capability Study,

2016." http://www.usfinancialcapability.org/.

Hensley, Billy, 2013. "Content-Based Teacher Professional

Development Pilot Project Research Report." National
Endowment for Financial Education and Jump$tart Teacher
Training Alliance. https://www.jstart.org/.

The Institute for College Access & Success, 2017. "Student Debt
and the Class of 2016." https://ticas.
org/sites/default/files/pub_files/classof2016.pdf.

Jump$tart Coalition, fourth edition, 2015. "National Standards in

K-12 Personal Finance Education." https://www.jstart.org/.

Klein, Asher and Giordano, Jackie, 2014. "Bill Clinton Visits USC
to Teach Kids Value of Financial Literacy." Channel 4, Southern
California. http://www.nbclosangeles.com/news/local/Bill-Clinton-
VisitsUSC-to-Host-Financial-Literacy-Event-282070241.html.

Mottola, Gary, 2014. "The Financial Capability of Young Adults-A

Generational View." FINRA Foundation, Financial Capability
Insights. http://www.usfinancialcapability.org/downloads/Financial
CapabilityofYoungAdults.pdf.

National Conference of State Legislatures. "Financial Literacy

Legislation;" for 2010 see: http://www. ncsl.org/research/financial-
services-and-commerce/financial-literacy-2010-legislation.aspx;
for 2011 see: http://www.ncsl.org/research/financial-services-and-
commerce/financial-literacy-2011-legislation.aspx; for 2012
see: http://www.ncsl.org/research/financial-services-and-
commerce/financial-literacy-2012-legislation.aspx; for 2013
see: http://www.ncsl.org/research/financial-services-and-
commerce/financial-literacy-2013-legislation.aspx; for 2014
see: http://www.ncsl.org/research/financial-services-and-
commerce/financial-literacy-2014-legislation.aspx; 2015
see: http://www.ncsl.org/ research/financial-services-and-
commerce/financial-literacy-2015-legislation.aspx; for 2016
see: http://www.ncsl.org/research/financial-services-and-
commerce/financial-literacy-2016-legislation.aspx; and for 2017
see: http://www.ncsl.org/research/financial-services-and-
commerce/financial-literacy-2017-legislation.aspx.

The National Foundation for Credit Counseling (NFCC) & The

Boeing Employees' Credit Union (BECU), 2017. "2017 Consumer
Financial Literacy Survey." https://nfcc.org/wp-
content/uploads/2017/03/NFCC_BECU_2017-FLS_datasheet-
with-key-findings.pdf .

Next Gen Personal Finance, 2017. "Who has access to financial

education in America
today?" https://drive.google.com/file/d/0B7wBayeobK4fY2YzN2lX
UU8wQXc/view.

Organisation for Economic Co-operation and Development's

(OECD) Programme for International Student Assessment (PISA),
2016. "PISA 2015 Assessment and Analytical Framework:
Mathematics, Reading, Science, Problem Solving and Financial
Literacy." Organisation for Economic Co-operation and
Development (OECD), 2017. "PISA 2015 Results: Students'
Financial Literacy (Volume
IV)." http://www.oecd.org/finance/financial-education/pisa-2015-
results-volume-iv-9789264270282-en.htm.

T. Rowe Price, 2017. "Parents, Kids & Money

Survey." http://www.moneyconfidentkids.com/content/money-
confident-kids/en/us/media/research/2017-parents--kids---money-
survey-results.html.

U.S. Department of Education, Federal Student Aid. "Official

Cohort Default Rate for
Schools." https://www2.ed.gov/offices/OSFAP/defaultmanagemen
t/cdr.html.

U.S. Department of Education, Institute of Education Sciences,

and National Center for Education Statistics, 2017. "Table 203.30
Public school enrollment grades 9 through 12 by Region, State
and Jurisdiction." "Digest of Education Statistics, 2017."

U.S. Department of Education, National Center for Education

Statistics, and the Institute of Education Sciences. "Fast Facts,
Back to School
Statistics." https://nces.ed.gov/fastfacts/display.asp?id=372.

U.S. Department of Education, National Center for Education

Statistics, and the Institute of Education Sciences. "Fast Facts,
Dropout Rates." https://nces.ed.gov/fastfacts/display.asp?id=16.

Way, Wendy and Holden, Karen, 2009. "Teachers' Background

and Capacity to Teach Personal Finance: Results of a National
Study." National Endowment for Financial
Education. https://nefe.org/What-We-Provide/Primary-
Research/Grant-Studies-Teachers-Preparedness-and-Money-
Man.