Financial literacy is the power of using knowledge and skills to manage financial resources effectively for financial well-being. Financial literacy helps in making sound financial decisions and ultimately helps in achieve an individual financial goal.
In a survey, it is found only 27 percent of Indians are financially literate.
Why is financial literacy important for children?
Financial markets are complex and are much more than the concept of saving only. Children should be made to learn and understand the concept of financial markets at their age, which can prevent them from investing in wrong financial instruments, they can influence their families by sharing the knowledge on how to better manage their money.
Where can children invest and save?
Opening a savings account for children will help them not only understand the importance of saving but also an investment. Public Provident Fund (PPF) can be opened with a guardian only with Rs 100 or its denomination .though the PPF account is for 15 years, this account can be extended indefinitely in a block of 5 years. A Sukanya Samridhi Yojana opened for a girl child below 10 years. Even investments in Systematic Investment Plan (SIP) made for a kid with a parent, can help them in learning the saving and investment concept in the long run. Investing in a scheme with a child would make the owner and responsible.
How can you teach them financial literacy?
Professionals like doctors, lawyers, and professors lack knowledge while making decisions regarding their personal finances. If the students understand the importance of financial markets starting from their school age, they can make the right decision at the right time.
National Stock Exchange is offering education on financial instruments in around 4,000 schools. CBSE offering courses like Financial Markets Management, Banking, and Insurance. Parents should also impart financial literacy among children like doing grocery shopping with them making them understand the basics of commerce. There are several short-term courses available online and offline on money management for school and college students. Parent should encourage their children to enroll in courses to make them financially literate and help them to take the right decision at the right time.