Financial literacy is basically the ability to understand and effectively use financial skills, such as managing money, budgeting, investing and keeping a track of one’s finances.

Three years back I was doing my internship with a not-for-profit organization working for the empowerment of women in the rural districts of Murshidabad in West Bengal. We did an extensive training session with a goal to make the women understand their rights and help them become independent. The session was designed with a number of fun activities and games with the goal to have a long-lasting impact on our beneficiaries. In one of the activities, the beneficiaries were asked to list all kinds of activities that were done in their family daily and the things their families own in small chits of paper. The women were then asked to segregate their activities/ possessions chits by relating it with themselves or their male counterparts. By the end of the activity, it was observed that most activities (starting from cooking, cleaning the house to taking care of family members) were associated with women while all possessions (including a mixer grinder) were owned by the men in the household. All these women were working women who were making their own money in the informal labour force as domestic workers and bidi workers.

This was the first time I realized the extent of inequality that exists in a household and how little rights women have over their own money.

Financial independence and women’s empowerment is closely connected. Financial independence ensures that an individual has the right to make their own decisions and subsequently live their lives on their own terms without being dependent on anyone. To attain financial independence, it is important to be financially literate, hence, comes in the importance of financial literacy.

People today have gained some knowledge of the atrocities and violence faced by married women in India. According to a joint report of the National Family Health Survey (NFHS-3) and National Crime Reports Bureau (NCRB) states that more than 70% of married women in India are in abusive marriages, abuse that range from domestic violence, marital rape to emotional abuse. Most of these cases never make it to the police or the courts because these women choose to stay in their abusive marriages. Apart from societal prejudices, the lack of financial independence is the main reason behind women making this difficult choice.

Many women are constantly made conscious that it is essential for a woman to get married in order to have stability in life. Often this becomes engraved in young girls and women and this in itself is problematic. Not only does it enable in lesser women to join the workforce in the hopes of getting married and being settled down but also gives men the additional responsibility of taking care of their female counterparts. Financial literacy is important so that men and women have shared responsibilities and are financially independent of each other.

Children tend to learn more by observing than by learning. Being financially literate parents has its own perks also in the form of children becoming financially literate from a very young age. 

Robert Kiyosaki, an American businessman and financial literacy expert, in his book states, “We were not taught financial literacy in school. It takes a lot of work and time to change our thinking and to become financially literate”.  Schools in an urge to impart knowledge often miss out on important life skills, one of them being financial literacy. With the COVID-19 pandemic, innumerable people have plunged into financial crisis, making it imperative to understand financial literacy. Financial education basics such as money management, savings and investments if imparted at a young age helps an individual kick-start their careers by the earliest. Individuals who have an understanding of how money works can not only start earning and investing at a young age but also can avoid money struggles throughout their lives. Living in a developing and highly populous country like India, the youth do not always have access to the social and financial security that is provided by our government. To avoid post-retirement struggles, it is essential that the youth in our country start saving and investing as soon as they start earning.

A financially literate individual is able to equip themselves better during times of crisis and emergencies. It also prevents individuals from being debt slaves and prevents them from making poor financial choices. Financial literacy enables the empowerment of individuals, especially women and youth. To conclude, if proper education of money management is received at a young stage, it helps create a responsible generation.