In this article, I would like to segment something significant about financial literacy. Education has always been an essential part of our life as it gives meaning to it.

Let me share my thoughts about how vital financial literacy is?

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Page Contents
Introduction To Financial Literacy.
Financial Education & Economic Developments In India.
Six Reasons Why Financial Education Is Important?
Importance Of Financial Literacy In Society.
Economic Condition
Final Thought

Let me describe financial literacy with the help of a story so that you can relate to it.

The Villagers And Cotton Production

In a village on the borders of the country, there was a small community settled. They produced cotton as a cash crop, which was sold further into main cities earning the villagers a reasonable revenue.

Despite being happy at making a living, the villagers were often awed by dealing with multiple intermediaries.

The giant loop created troubles for the poor villagers as they did not receive timely payments, and any amendments in the consignment were reported after a long delay.

Another problem that added fire to the fuel towards ”mediators” was the small profit margin; they would leave for the villagers.

The mediators would often charge massive commissions and leave a smaller amount behind for the producers.

Villagers wanted to eradicate this method and interact directly with the customers through the main markets.

The Meeting With The Head Of State

The village head was presented with the farmers’ issue, and he decided to think upon the idea of direct sales.

It took a long time, but a meeting was placed, and it was determined that farmers would be refining the cotton, producing raw cloth, and then export it from the village.

Nevertheless, refining cotton was never easy; it required expensive machinery and skilled people who know how to use it.

The technical operations were to be dealt with by the “educated” people amongst the illiterate villagers.

While it is true that the group had educated young men, but the situation was a perfect fit for the proverb. 

“Man with an eye would be the ruler of the blinds,” their expertise and skills were exaggerated.

The New Idea And Its Failure

The villagers started to follow the decided pattern; the cotton was produced and sent towards the factory for refinement.

The refinement began; the “skilled” technicians tried their part but failed to achieve success.

The refinement of cotton took far more time than a regular consignment would take to deliver; in addition to it, the final product produced was lesser in quantity than the usual delivery, and piles of wastage covered the basement.

Conditions for the villagers worsened when the cotton reached the market- it was below the expected quality, and customers did not appreciate it.

Hence, most of them remain unsold. All the efforts and resources were wasted as the profit turned into a loss; only if the villagers had adequate knowledge to utilize resources, the measures would have come up roses.

Utilization Of Resources

As the last line, the story indicates the importance of resource utilization; lack of knowledge and wisdom might result in significant losses. 

Everything you learn each passing day adds up to what you end up with when it matters.

Financial education has the utmost importance in practical life. Those with inadequate knowledge might lose all they have; simultaneously, people with apt financial knowledge shall earn greater returns.

Financial Literacy

Introduction To Financial Literacy 

According to the National Foundation for Educational Research,

“Financial literacy is the capability to make conversant judgments and make effective decisions regarding the use and management of money.”

Financial education enables you to properly understand your cash flows and apply your financial literacy skills to achieve financial stability with better control over your resources.

According to a survey in the USA, Most American citizens spend more than they earn.

The extra amount they spend includes different types of loans, such as credit loans or loans.


The same situation is in the largest country in Asia, “India.” More than half of the Indian population is financially illiterate. They don’t understand their cash flows and make wrong Financial Decisions.

Why is it necessary for everyone to be financially literate, and why should it be taught in educational institutes?

Let’s discuss it further in detail.

Education & Development

Financial Education & Economic Development In India 

Financial literacy has a significant value in economic development. It helps in the transformation of society by enabling every member of society to understand Financial issues better.

According to a report published in 2017, Financial Literacy is regarded as an essential factor of the Country’s economic development and the households’ financial potential.

Unfortunately, there are not many financial education programs introduced by the Governments.

With the introduction of Financial Education Programs, people will have increased awareness of it.

It will surely boost the country’s economic and socio-economic growth.

Six Reasons Why Financial Education Should Be Taught at Educational Institutes

Let me start with a fundamental but important one, “Health.” We all heard a very famous quote.

”Health Is Wealth”.

1. Financial Illiteracy Has Adverse Effects On Health:

Difficulties in managing finance are one of the significant causes of stress among adults.

When young people lack the skills to manage their financial budgets effectively, they fail to meet their needs.

Hence, they suffer from Financial stress. Financial stress leads to several health problems such as depression, anxiety, feelings of loss of control, and other mentalemotional distress. 

In the worst cases, financial stress could also lead to suicides. According to a poll conducted by Associated Press Health, approximately 16 to 20 million people are “suffering awfully due to their debts, and their health is probable to impact negatively.

With the introduction of financial education in educational institutions, we can significantly improve every student’s financial knowledge awareness.

Financial Literacy & Society

2. Financial Literacy Helps To Live A Healthier & Happier Lifestyle:

Financially educated peoples are well aware of their income pattern, and they make sure to save an amount for their hard times.

Most people with a lack of financial education don’t save or invest their amount for the difficult times, while the genius peoples take the other route making reasonable investing and saving decisions.

With a smarter approach to investing or saving, they successfully deal with the tough times while enjoying a healthier and happier lifestyle.

Financial experts suggest saving 15% of the net income. This is only possible when people become financially literate.

3. Student Loans Are Costlier:

The education expenses of students have increased. When the students get admissions to colleges or schools, they are unable to pay their huge fees. As a result, students opt for student loans.

The student loans are costlier and hard to pay back due to the rising interest. The students who opt for loans usually have no or little financial education.

They don’t know the drawbacks of drawing huge debts.

When financial education is imparted in schools, the same students will prefer to save money rather than spending it unnecessarily so that they don’t require huge loans.

They get the chance to learn and understand financial contracts earlier. This allows them to devise wiser financial decisions.

4. People Go Bankrupt At A Younger age:

According to a report by the USA, almost one in every five Americans from age 18 to 24 declared bankruptcy,

People become bankrupt for Credit Debt, Student Loans, Bad Budgeting, Unexpected Expenses, and overspending. 

All these reasons are linked to financial illiteracy. To prevent young peoples from making the wrong financial decisions, we must focus on teaching financial education to every student from an early age.

Current life is such that almost from the get-go, as people get into the job market, they have to make economic decisions and financial decisions.

5. The Importance Of Financial Literacy In A Society:

Financial literacy is the fundamental knowledge that Society should seek to lead to its needs and prosperity.

The Indian community has failed to provide the deserved heed to financial literacy, while the importance of skill-based education has found its emerging supporters.

The economic, educational programs have been neglected both by the governments and by the public.

One of the main reasons behind the minimal importance is the lack of awareness. At the same time, we learn how to earn money through various mediums; investing and utilizing it properly isn’t a popular teaching custom.


Need Of The Hour

6. The Bleak Economic Condition:

According to several published reports, India experienced only 50,000 small and large-scale start-ups in 2019, clear progress from a dull 2018 and unstable 2016/17.

The Country has improved explicitly in motivating the young generation to choose a different track than the norm.

According to research, the average age of start-up entrepreneurs was as young as 28 years, while 9% were female.

The start-ups were divided amongst multiple sectors, and most of them were either online businesses or based closely on technology.

As every coin has two sides, you might be indulged into thinking that it is a right foot forward, but I feel sorry to burst that bubble.

According to an analysis published by IBM, with the cooperation of OXFORD Economics, 90% of the minimal 50,000 start-ups shall fail within the first five years of operations, while 50% of them might quit in half the time.

The information stated above shall be dismal for any reader, but we have a solution to overcome these crises like every other problem.

Financial education is the answer that shall help Society grow economically.

Financial Education Is The Answer To Growth,

Final Thought

Conclusively, we have come across a great deal of knowledge about financial education and how it can collectively help us grow as an individual and society.

Unlike school-based education, financial education does not require you to invest years of hard work, but it is more of sessional discussions that enlighten your mind with valuable wisdom.

Life is short, and it takes enormous effort and good luck to make a comeback after your mistakes.

The best way to achieve success is to stop wasting your resources and take adequate measures for their utilization.

It is high time that we pay financial literacy; it’s deserved heed and consider it as necessary as traditional education, if not more.

Be it building a decision-making ability, understanding the business cycle, and enlightening us with multiple income streams, financial education provides knowledge about every aspect of utilizing, investing, and regenerating their resources.

Thank you, everyone, for a fantastic response to my previous article.

Stay connected and keep motivating me so that I can write blogs that add value.

I would be grateful if you could share your thoughts about this post. You can send your ideas to

Please do share this post with others. Please read my previous blogs here.


Raj Kumar

I am Raj, Founder of I would like to share my thoughts and life experiences with the readers on this website.


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