Financial Literacy – Its important to know how money is important in our life

Introduction :

Now we are living in the digital world as for us salary will credit in banks, we are doing UPI payments , we are taking online loans , investing in the apps . Bit if financial literacy is not there means we cant able to manage the earned money properly.

In this article we will able be to know why Financial Literacy is importance , regarding saving , budgeting , loans , investments, investments, common mistakes, tips for the students and employees line by line in a simple way.

What is Financial Literacy :

Financial Literacy is nothing but the complete knowledge on how to earn the money , how to save the money, how to spend the money , how to invest the money.

IN SIMPLE TERM : To learn how to use the money correctly without wasting is Financial Literacy.

Actually in schools they will teach this type of knowledge very less but it was very important in our real life.

Why Financial Literacy Important :

what if the Financial Literacy is not there :

1.At the end of month of salary credited there will be no money

2.By taking loans easily and we will be moved to debt.

3. Loosing money in the fraud schemes.

what if the Financial Literacy is there :

1. We can able to control the monthly expenses.
2. We can able to handle the emergences situations.
3. Future can able to be secure.

 

What is Income ? what are Income Types

Income means nothing but the money we will get

1. Active Income

! Salary – Will we salary per month like doing jobs in It , shops etc.

! Daily wages- Like we will get money by doing work on daily base

2.Passive Income

! Rent Income – By getting money through the rent

! Interest Income – By getting money through the interest

! Investment Returns – By getting money through the returns of the investment.

GOAL : So here what we should learn and set as Goal is with the active income how to build the passive income

Budgeting – How to keep money in control

Budget means monthly income & expenses list.

Simple Budget Formula:

BUDGET – Budget is nothing but the monthly income and expenses list.

Simple Budget Formula:

1. 50% – We need to keep 50 5 of our income in NEEDs like paying rents, food, bills like current etc.
2. 30 % – We need to keep 30% of our income in the Wants like shopping , entertainment.
3. 20 % – we need to keep 20 % of our income in the savings and investments.

By maintaining the budget we can able to reduce the unnecessary expenses.

Saving – First Step for future :

What is saving money : Saving means not the remaining money apart from all. Saving means first we need to keep some money.

Saving Examples : To keep money for some respective goals,funds

1. Emergency fund – 6 months expenses.
2. Short Term goals – like Mobile, Bike , car
3. Long term goals – like house , marriage

Here we all need to follow one rule is firstly by earning the money only we need to save the money then only we need to spend the money.

Banking Knowledge (Must Know)

Everyone should able to know the banking basics , it will be very useful in our life .

There are few accounts in the bank where we can able to keep our money and get benefit. Here are few examples in the banking account

1.Saving account

2.Current account

3. Fixed Deposit (FD)

4.Recurring Deposit (RD)

5. Interest rates.

Using the ATM,UPI , net banking safely is also in the part of the financial literacy.

Before taking Loans – debt we should know few things :

All members will take the loans because it was easily available. But all members should know that the loans can easily available but it was too danger.

We will see few common loan types which are available :

1.Personal Loan

2.Home Loan

3.Education Loan

4.Credit card Loan

we should not take loans directly before knowing the following information

1. Interest rate
2. EMI amount
3. Repayment period

Its better to avoid the unnecessary loans .

Credit Cards – It was good to use but it was danger to misuse

Credit card was one of the powerful tool.

Advantages :

! Emergency Support

! Credit score will be build

Disadvantages :

! High interest

! Over spending habit

Here we need to know that we should use credit card as an debit not as an money.

What is Investment

Investment means to increase or to grow the money .

Common Investment Options:

• Fixed Deposits
• Mutual Funds
• Gold
• Stock Market
• PPF & NPS

We should not blindly invest the money before investing we should know what is the risk and how much return we will get after knowing the risk and return only we need to invest

Mutual Funds – Best Option for Beginners

Mutual funds means some people like professional will be there they will mange the money.

ADVANTAGES :

1. We can able to start the funds with the small amounts. so everyone can able to start the funds .
2. Long Term wealth creation- we can able to keep in long term

SIP – Systematic Investment Plan , it was the best option for the salaried people.

Insurance – Risk Protection

Insurance means it was nothing but the protection.

They are many insurances everyone should have few insurances among all few are

• Health insurance – In the emergency condition of our health it will be useful , we all know that if w ego to hospital so much money will be completed so its better to have this insurance
• Life insurance- It was also very important after our death some amount will be given to the family so that they will be no fear to take care of our family.

 

If there was no insurance our saving will be completed in emergency because in emergency situation like health condition if there is no insurance means then it will become more headache to give money so if insurance there means it will help at the emergency time.

How to avoid the Financial Frauds

Here we will know how to avoid the financial frauds ,by directly or indirectly we all will be in trap of the fraud so here are some important things to avoid for fraud

Common Fraud :

• Fake calls from bank – Avoid the fake calls which are from the bank
• OTP sharing scams – Don’t share Otp to anyone
• High return investment schemes -Don’t go for high return investments

Rules to be followed to avoid in trap of fraud:

1. Do not share the OTP to anyone including your friends.
2. 2. Don’t open the unknown links by knowingly
3. Don’t trust the too good to be true offers, don’t trust all the offers after backend check only go for offers.

 

Financial Literacy for Students

All students should learn early regarding the financial literacy.

In education level only all members should able to learn regarding financial , as of now what happening by the time of knowing the financial literary there is no money in our hand so its better to predict early and start the process to save and invest.

Few thing to learn early :

• Pocket money budgeting
• Saving habit
• Online payments safety.

Early awareness will be strong foundation in the future.

Financial Planning Employees & Families

Employees: Employees should have planning in finance sector

• Salary planning
• Tax planning
• Retirement planning

Families: family should have knowledge regarding few funds where they can invest and will be useful for their families , here are the few examples in which fields they should have knowledge

• Children education fund
• Emergency fund
• Insurance coverage

All members should have planning about the financial to have better future.

Financial Literacy & Mental Peace

We will get stress due to money issues. By following the financial literacy we will get some benefits we may reduce our mental health. so here are the few

1. Confidence will be increase
2. Fear will reduce
3. It was possible to have peaceful

Government & Financial Awareness

Even government also will promote the financial literacy

Here are few includes:

!. Digital India

! Jan Dhan Yojana

! UPI awareness

If we have awareness we can able to use the benefits correctly

Future of Financial Literacy

In Future we will have following ,so it will be useful to have the financial literacy

• Cashless economy
• Online investments
• Digital banking

If we don’t have the Financial literacy it will be very difficult to survive in the life.

Conclusion

Financial Literacy is not luxury it our necessity . If we are not able to control our money money will only control us. This knowledge is very important to every person , to every family, to every student. If we learn the Financial Literacy our future will be secure, safe, peaceful.

FAQs

Q1. What is financial literacy?

To learn how to manage the money is financial literacy .

Q2. Why financial literacy is important?

For future security.

Q3. Is financial literary is important for students?

yes, to start early is best for everyone.