The Importance of Financial Literacy.

Introduction:

In a world where individuals accumulate substantial savings but often fail to utilize them effectively, questions arise about the purpose and value of money. This article delves into the intriguing phenomenon of individuals dying with significant sums of money in their bank accounts, unclaimed and unused. Examining the need for financial literacy, we explore the reasons behind this behavior and the dire need for comprehensive financial education in schools. With a focus on India's financial landscape and its global implications, we uncover the importance of understanding finances and making informed decisions.

Understanding the Phenomenon:

In 2019, a staggering amount of 18,830 crore rupees lay unclaimed in Indian banks. This accumulation of unclaimed funds primarily belongs to individuals who have passed away or lack inheritors to claim the money. This raises the question of why people amass such vast sums without the ability to spend or pass them on to future generations. Surveys indicate various motivations, including saving for unforeseen costs, leaving a legacy, or simply feeling secure with money in the bank. The fear of running out of money and the irreversibility of spending were also cited as reasons for not utilizing accumulated savings.

The Need for Financial Literacy:

These peculiar behaviors surrounding money highlight a larger issue: the lack of financial literacy. In a country like India, where only 24 percent of adults possess financial literacy skills, it becomes evident that a significant portion of the population lacks essential knowledge about saving, investing, budgeting, and managing debt. Similar challenges exist worldwide, with developed nations also grappling with low levels of financial literacy.

Education as the Solution:

To address this pressing issue, it is crucial to integrate financial literacy into school curriculam. By imparting financial knowledge at an early age, individuals can develop a comprehensive understanding of economics, loans, interest rates, investments, and budgeting. Currently, only a fraction of Indian states and several countries have introduced mandatory financial literacy programs in schools. However, widespread implementation is necessary to equip individuals with the skills needed to make informed financial decisions.

Benefits of Financial Literacy:

Financial literacy empowers individuals to navigate financial complexities effectively. By understanding economics, loans, and investments, individuals can make informed choices about education, expenses, and retirement planning. Financial literacy helps individuals maintain a healthy credit score, which impacts their ability to secure loans and rentals. It enables individuals to set realistic saving goals, track their progress, and ultimately achieve financial freedom. By promoting smart investments, financial literacy ensures a better quality of life and reduces the risk of leaving behind financial burdens for loved ones.

Taking Action:

In countries where financial literacy is lacking in school curriculam, individuals can proactively seek knowledge through online courses and resources. Many free courses cover fundamental finance principles, making it accessible to people of all ages. The key lies in self-education and encouraging others to do the same. By maximizing savings, individuals can secure their future while pursuing their dreams without compromising their financial well-being.

Conclusion:

In conclusion, the significance of financial literacy cannot be overstated. As individuals and societies grapple with the peculiar phenomenon of individuals dying with substantial savings, unclaimed and unused, it becomes evident that a lack of financial education is at the root of the problem. By incorporating financial literacy into school curricula, we can equip individuals with the necessary skills to navigate the complexities of personal finance.

It is imperative for governments and educational institutions to recognize the importance of financial literacy and take proactive steps to implement comprehensive financial education programs. By starting at an early age, students can develop a solid foundation in financial principles, including saving, investing, budgeting, and debt management. Such knowledge will empower them to make informed decisions and avoid the pitfalls that often lead to financial hardship.

Beyond the classroom, individuals should take personal responsibility for their financial education. Online resources and courses offer accessible avenues for self-improvement in financial literacy. By actively seeking knowledge and understanding, individuals can gain the confidence and competence to manage their finances effectively.