Paarth Dhar, who heads Fin One, a financial education initiative of Angel One, emphasizes the importance of financial knowledge to ensure a stable future.
Financial education: a growing need
In the digital age and India’s expanding economy, financial literacy is more crucial than ever.
According to the Reserve Bank of India, only 27% of Indian adults are financially literate and only 24% of Indian women meet basic standards.
Dhar points out that this gap indicates a significant need for specific financial education, particularly among younger generations.
A 2019 report from the Global Financial Literacy Excellence Centre (GFLEC) highlights that improving financial literacy It is strongly correlated with better financial outcomes, such as effective savings behavior, credit management, and investment choices.
Dhar stresses that as ambitions increase, so does the need for financial education to help people achieve their goals and avoid financial hardship.
Youth aspirations and financial reality
A Mintel study reveals that 77% of today’s youth aspire to own a home, 59% dream of owning a car and 55% hope to travel abroad. However, 69% of Indian households still lack financial security.
Dhar points out that financial literacy is crucial to turning these aspirations into reality.
Suggests several strategies to achieve financial stability:
Master budget for control
Dhar advises starting by creating a budget. “A monthly budget helps people manage their finances effectively, covering basic expenses, savings and future goals like buying a car or a house,” she says.
It notes that 27% of global users aged 18-34 use budgeting apps, which can automate savings and help track financial goals.
Early understanding of compound interest
Compound interest is a powerful tool for building wealth. “Investing early allows you to benefit from compound interest, a vital principle for wealth creation,” explains Dhar. Regular investments through Systematic Investment Plans (SIPs) can build significant wealth over time, he adds.
Rationalize spending
Dhar warns of the impact of impulsive spending driven by FOMO and the YOLO mentality.
Online shopping is expected to reach 300-350 million users by 2025, so teaching young people to control discretionary spending and focus on long-term goals is essential.
Build a strong credit rating
A good credit score can help you access better financial products. “Paying bills on time and managing debt responsibly are key to building a strong credit profile,” says Dhar.
He points out that financial education can help young people establish good credit habits from an early age.
Empowering the next generation
Financial literacy is as crucial as traditional literacy.
Equips people to make informed decisions, manage debt and build wealth.
Dhar emphasizes that in a country where 70% of households lack financial security, financial education is not only beneficial but necessary.
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