Boosting Financial Literacy in the 4th IR Amongst Working and Non-Working Women in India

Introduction

The concept of financial literacy has evolved in recent times whereby the market is volatile and there is no job security. Most of the individuals are employed in the Private sector where the future is not secured as an employer is not responsible for providing pension to employees. Since 2005 government of India has also discontinued the practice of paying retirement pensions to its employees. The government is moving down the path of encouraging their citizen to undertake the responsibility for their retirement incomes and to focus on sound financial planning and not be dependent on the pension provided by the government. As a result, financial literacy has become essential for working individuals to be able to survive in modern society and to take prudent financial decisions for their future as there is a challenge to understand the complex financial products and services offered by various companies. In today’s time's people need to be more knowledgeable about superannuation funds and how they operate and evaluate the returns that they promise.

The financial market is much more complex compared to the earlier times. The option of financial investments and credit facilities has increased manifolds since yesteryears. In such a complicated market knowing financial instruments and markets has become imperative. From the very early stage, a youth needs to understand the importance of planning for long-term investment and short-term saving to meet the need of funds for vacation, down payment for a house, a loan for education, a car loan, children education, secured retirement, etc. Researchers all over the world have reported inadequate financial literacy among the youth. Most developed countries such as the USA, UK, Canada, Australia, and several countries of Europe have reported financial literacy rates between 55 -75% (Figure 1).

India has a long way to go to achieve comparable financial literacy rates as the developed countries. Among the several challenges posed to our country in achieving the status of developed nations, perhaps the biggest in women's empowerment. This is achievable only when the women of the country will be educated, financially literate. and independent. Financial Literacy implies the capability to make effective decisions regarding the use of monetary resources. In the words of Noctor et al. (1992), a financially literate individual was capable of making intellectual judgments and adopting effective choices regarding the usage and management of money. In our country, women are at par with men in almost all fields but when it comes to financial decision-making, they are still dependent on the male members of their families. Our country is burdened with numerous challenges. The major ones are burgeoning population, unemployment, illiteracy, skewed distribution of wealth, poor health infrastructure, etc. Considering the distribution of wealth, illiteracy, and poor health indices, it becomes essential to educate the women and make them financially literate women to shoulder the responsibilities equally with men and fuel the engine of growth, thus contributing to the economic growth of the nation.

Instances of extreme poverty have been reported by women post the death of the earning member of the family. Such instances of dire poverty and financial misery could have been avoided with future financial planning, contingency savings, and emergency funds. At times, women are aware of such products but are reluctant to take the initiative to go for such options due to poor and incomplete information or lack of confidence. Comparing the women of developed countries with the women of developing countries it is found that women of developed countries are better financial planners, they are to manage money in a much better way, and the reason for this probably is that the women of developed countries score high on financial literacy. Financial Literacy not only involves knowing the systems and methods of financial prudence, but it also implies practical implementation of the concepts and theories of financial literacy. Bridging the gap between theory and practice is a challenge and the real test of a financially prudent person is that he or she can apply it today to day operations.