Financial Literacy of Youth

CONTENTS
Sl. No. DESCRIPTION PAGE NO.

LIST OF TABLES
LIST OF CHARTS
1 INTRODUCTION
2 OBJECTIVES OF THE STUDY
3 SCOPE OF THE STUDY
4 LIMITATIONS OF THE STUDY
5 RESEARCH METHODOLOGY
6 RESEARCH DESIGN
7 DATA COLLECTION
8 METHODS OF DATA
COLLECTION
9 TOOLS OF DATA COLLECTION
10 RESULTS AND DISCUSSION
11 FINDINGS & SUGGECTIONS
12 CONCLUSION
13 BIBILOGRAPHY
14 APPENDICES
LIST OF TABLES AND CHARTS
SI.NO PAGE NO.
1 GENDER
2 AGE
3 PARENTAL INCOME
4 UG
5 WORK EXPERIENCE
6 FATHERS SCHOOLING
7 EDUCATION PAYMENT
8 SPECIALISATION
9 COUNSELING
10 ABILITY TO MANAGE FINACE
11 INTERESTE IN FINANCIAL KNOWLEDGE
12 FINANCIAL RECORD
13 SPENDING
14 INSURANCE COVERAGE
15 INVESTMENT PROGRAM
16 CONTROL OF FINANCIAL SITUATION
17 FINANCIAL GOAL
18 SOURCE OF WORRY
19 SPENDING OF MONEY
20 CREDIT CARDS
21 PURCHASING
22 FINANCIAL FUTURE
23 CREDIT
24 COST OF CREDIT CARD

INTRODUCTION TO THE STUDY
FINANCIAL LITERACY
In recent years, the financial literacy has gained the attention of wide range of major banking
companies, governments’ agencies, grass-roots consumer and community interest groups, and
other organizations. Interested groups, including policymakers, are concerned that consumers
lack a working knowledge of financial concept and do not have the tools they need to make
decisions most advantageous to their economic well being .Such financial literacy deficiencies
can affect an individual’s or family’s day to day money management and ability to save for long
term goals such as buying a home, seeking higher education, or financing retirement. Ineffective
money management can also result in behaviors that make consumers vulnerable to serve
financial crises. From a broader perspective, market operations and competitive forces are
compromised when consumers do not have the skills to manage their finances effectively
informed participants help create a more competitive, more efficient market. As knowledgeable
consumers demand products that meet their short and long term financial needs, providers
compete to create products having the characteristics that best respond to those demands. As
concerns about financial literacy has increased, so too have number and variety of financial
literacy training program providers- some offering comprehensive information on savings, credit.
And similar topics for a broad audience and others tailored to a specific group, such as youth or
military personnel, or focused on a specific goal such as home ownership or savings.
The findings of studies of the effectiveness of financial literacy training have been mixed.
Although some programs, particularly those having discrete objectives, have succeeded in
improving certain aspects of customers personal financial management – such as maintaining a
mortgage, increasing savings ,or participating in employer sponsored benefit plans –improved
financial behavior does not necessarily follow from increased financial information. The timing
and format of training, as well as human traits such as aversion to change play a role in whether
programs will effect positive change that contributes `to households’ long term financial well-
being. Accounting for all the variables associated with financial literacy training-when, how and
where it is delivered, who is trained, and what information is presented-poses a great challenge
for program developers. Given the resources now devoted to financial literacy training, this is an
opportune time to evaluate the research, identify best practices, and consider public policy
options that would further the goal of creating more financially savvy consumers. Numerous
factors have led to a complex, specialized financial services marketplace that requires consumers
to be actively engaged if they are to manage their finances effectively. The forces of technology
and market innovation, driven by increased competition have resulted in a sophisticated industry
in which consumers are offered a broad spectrum of services by a wide array of providers.
Compelling consumer issues, such as the very visible issue of predatory lending, high levels of
consumer dept, and low saving rates, have also added to the sense of urgency surrounding
financial literacy. Other important demographic and market trends contributing to concerns
include increased diversity of the population, resulting in households that may face languages,
cultural or other barriers to establishing a banking relationship; expanded access to credit for
younger populations; and increased employee responsibility for directing their own investments
in employer-sponsored retirement and pension plans.
The National Foundation for Educational, for example, define financial literacy as
“the ability to make informed judgments and take effective decisions regarding the use and
Management of money”
“Financially capable people are able to make informed financial decisions. They are numerate
and can budget ant manage money effectively .They understand how to manage credit and debt.
They are able to assess needs for insurance and protection. They can assess the different risks
and returns involved in different saving and investment option they have an understanding of the
wider ethical, social, political an environmental dimensions of finances”.
“Financial literacy could there for b defined as an individual ability to obtain understand and
evaluate the relevant information necessary to make decisions with an awareness of the likely.
financial consequences “
According to some experts financial literacy has four discrete aspects:
 Managing money
 Planning ahead
 Making choices
 Getting help
People discussed the issues about knowledge, understanding, skills, attitudes, confidence and
personality in the context of their behavior in relation to these four activities. They felt that
personality, confidence and attitudes were inextricably bound up with knowledge and skills, with
the outcomes reflected in behavior.
Managing money
This was primarily concerned with able to live within one’s means. Financially capable people
needed to be well organized, particularly when it came to paying bills, and keeping and using
financial records. Saying within one’s means involved developing strategies to make ends meet
and resisting pressures to spend or to borrow money. It also involved accepting responsibility for
one’s actions. Financially capable people budgeted for lumpy or unexpected expenditure.
Planning ahead
This is required for two purposes: to cope with unexpected events and to make provision for the
long term. Unexpected events can upset budgeted and financial plans. Financial capable people
are able to deal with a large fall in income. They have a plan for meeting expenditure in such
circumstances; they have a clear idea for the help that they can expect from the state and from
others, such as employers; and they know about, and understand, insurance. They also know how
to cope with large unforeseen expenses. They have made some provision for such unexpected
events and they are aware of possible sources of financial help.
Planning for the long term also important. Here discussion focused on retirement and pensions,
possibly because the issue was very topical at the time. They felt that a financially capable
person would have made adequate provision or have firm plans to do so; they would know what
sort of help would be forthcoming from the state; they would know about appropriate financial
products; and they would know how and where to seek advice.
Making choices
Given the array of financial products available, being aware of what was on offer and being able
to chose those that were most appropriate to an individual’s circumstances were important
aspects of financial literacy. People needed a good general awareness of the types of product that
were available but a constant preoccupation with a financial matters was “sad” and did not
indicate confidence. Consumers should be able to choose the products that were right for them.
This require an ability to compare costs and returns; an ability to assess risk and to identify risky
products; and an ability to look at products holistically. The financially capable person was also
able, and confident enough, to say “no” in the face of assertive selling or seductive advertising.
Some felt that a financially capable person would be able to work the system, getting for
example, the most advantageous interest rates by switching between products. They would
certainly know the key features of the products that they had bought, even though they might
have struggled with the small print to understand the terms and conditions.
Getting help
This had two dimensions: self reliance and using third parties. First, people should be able to
gather information for them. This involved both general environmental scanning, which kept
them up to date with what was going on, as well as the ability to find and compare information
about different products. Secondly a financially capable person would know where and when to
turn for advice and help from a third party. They would also be able to judge how much trust to
place in the information and advice provided.
LITERATURE REVIEW
SL. TITLE OF AUTHOR OF VARIABLES STUDIED METHODOLOGY OBJECTIVES OF THE FINDINGS OF THE
N THE THE STUDY USED STUDY STUDY
O. STUDY
1 College .Brenda J cude, Credit Online survey,UGA -Study about college Parents play a key
students .Frances c cards,Gender,Attitud financial fitness students overall role in their
and Lawrence, e towards credit, quiz financial children’s financial
financial Lousiana, Marital management socialization
literacy Angela c,Lyons, status,Income,Parent practices -Students were very
Kaci Metzger, ial involvement.(of -How college interested in
Emily Lejeune, UGA students) students acquire receiving financial
Loven Marks, financial knowledge management
Krisanna -Factors that place information through
Machtmas some students at university.
greater financial risk -Students who are
than others. more actively using
their credit cards are
more likely to be at
financial risk than
students who do not
use credit cards.
2 Financial Anna-Maria Gender,race,Smoking -Youth interview -study the financial -financial literacy
literacy Lusardi, habit, educational -Youth knowledge of was strongly related
among Olivla s. Michel, qualfcations/grade,P parentsinterview students to
the Vilsa curto arents background, -Financial literacy -study about family sociodemographic
young Parents educational questionnaire background and characteristics’ and
qualification (of 23- students financial family financial
28 year students) interest sophistication
-study about the -Lack of financial
gender difference in knowledge is wide
the financial literacy spred among the
young
-There is strong
association between
financial literacy and
cognitive ability,
-women’s least
financially literate
3 Financial Samy.M,Tawfik Credit -Potential use of -Literacy of youth -There is strong
literacy H, Huang,Dr. cards,loans,superann neutral network to -work life and study relevance between
of youth martin samy uation(pension analyse the data status of students credit card status
sheme),Unemploym -mathematical -Part time job of and daily routne
ent,Family programming students and literacy -Financial stress is
size,Economic model commom among
conditions,Financial -Simultations low income families
stress, Age,Gender -survey -Gender has a
(of 16-24 year bearing in this
students) research
-Living status,phone
plan status
influences the
respondents.
4 Personal Hayang Academic Survey -Personal financial -college students
financial chen,Ronald discipline,class Questionnaire literacy among knowledge on
literacy p.volpe rank,Gender Anova college students personal finance is
among Race,Nationality,Wor -Why some college inadequate
college k students are -Reason for the low
students experience,Age,Inco relatively more level of knowledge is
. me.. knowledge than the systematic lack
others of sound personal
-How a students finance education in
knowledge influences college curriculum
higher opinions and
decisions on personal
financial issues.
5 Personal ,Ronald P. Literacy and gender Two tailed median -college students -knowledge of
investm Volpe Academic discipline test Questionnaire knowledge of personal investment
ent .Haiyang chen and experience personal investment is grossly
Literacy .Joseph -In what areas is inadequate
among j.pavlicko investment illiteracy -The investment
college most evident among illiteracy among
students college students college students
-What is the must be addressed
relationship between -Attitude and
illiteracy and gender behavior play an
academic important role.
discipline,are
experience
Objectives of the study
 To find the financial literacy in youth.
 To find the factors affecting financial literacy.
 Influence of parents in financial literacy of youth.
Scope of the study
 Further researches can be done on this topic because it is a vast subject
 It is very helpful to select the different types of financial learning.
 As the study is conducted happy valley business school it easy to understand the
financial literacy of this area
 The study enables to know the expectation of the students.
Limitations of the study

 Quality of the information highly dependent on the knowledge of the respondents
 This study is conducted in short time duration
 The survey needs to collect information from people who are from different U.G
background.
RESEARCH METHODOLOGY
1. SAMPLE SIZE
This study has been conducted in Happy valley B-school. So the populations are very low.
So it is very easy to catch up all people in the college. So a sample of 50 people has been given
the questionnaire. This study has been conducted on this sample with the assumption that the
result which is got from this sample may be same as result may be got from population.
This 50 include males and females, different UG background, common difference etc.
SAMPLES DESIGN
Researchers collect information by a wide variety of methods, ranking from the experimental
designs used n the physical sciences through to the surveys more common in the social sciences.
Many of these methods of gathering information involve a choice of experimental subject. For
example, we may want to choose the patients to be examined in the medical study, or the
respondents to be interviewed in a survey. This choice can be made using probability-based
methods, where the choice is by some “mechanical” procedure involving list of random numbers
or the equivalent. Alternatively, the choice may be made by other methods, invoking some
elements of judgment. Methods involving judgment are sometimes referred to as purposive
selection, judgment selection, or non-probability selection. In this generality, it is difficult to say
very much about the choice between probability and non-probability selection. I will narrow the
focus to the two kinds of surveys mentioned in the introduction: probability-based sample
surveys, and quota samples.
Sampling methods are classified as either probability or non probability. In probability samples,
each member of the population has a known non-zero probability of being selected. Probability
methods include random sampling, systematic sampling and stratified sampling.
In non probability sampling, members are selected from the population in some non random
manner. These include convenient sampling, judgment sampling, quota sampling and snow ball
sampling.
Examples of non probability sampling include:
 Convenience, haphazard or Accidental sampling- Members of the population are

chosen based on their relative ease of access. To sample friends, coworkers or
shoppers at a single mall, are all examples of convenient sampling.
 Snowball Sampling- the first respondent refers a friend. The friend also refers a
friend, etc
 Judgment sampling or purposive sampling- the researcher chooses the sample
based on who they think would be appropriate for the study. This is used
primarily when there are a limited number of people that have expertise n the area
being researched.
 Deviant case- gets cases that substantially differ from the dominant pattern (a
special type of purposive sample).
 Case study- the research n limited to one group, often with a similar
characteristics or of small size
 Ad hoc quotas- a quota is established (say 65% women) and the researchers are
free to choose any respondent they wish as long as the quota is met.
Here the researcher has purposive sampling.
Purposive sampling is virtually synonymous with qualitative research. However, because there
are many objectives that qualitative researchers might have a list of “purposive” strategies that
you might follow is virtually endless, and any given list will reflect on the range of situations the
author of that list has considered. And yet, certainly there are some objectives and Interest that
characterize qualitative research. For one thing, qualitative researchers are less often interested in
asking about centrally tendency in a larger group (e.g., “what do most people n the population
think about an issue?”), and much more interested in case study analysis- why particular people
(or groups) feel particular ways, the processes by which these attitudes are constructed and the
role they play in dynamic processes within the organization or group.
Embedded in this is the idea that who a person is and where that person is located within
a group is important, unlike other forms of research where people are viewed as essentially
interchangeable. Research participants are not always created equal- one well place articulate
informant will often advance your research far better than any randomly choosen sample of 50-
and the way we sample need to take that into account.
TYPES OF DATA
Data are classified into two:
a) Primary data
b) Secondary data
For this study, researcher has to use both types of data. Primary data are the main data which are used in
this study and it is used for analyzing purpose. Primary data will be collected from the people from
various categories. Secondary data will be used to get an understanding about the industry and company.
It is been collected from internet and magazines.
Secondary data is available effortlessly, rapidly and inexpensively. Primary data takes a lot of time and
the unit cost of such data is relatively high.
Data collection tools:
These are instrument used to collect information for use in performance assessment, self-
evaluation and external evaluation. Examples are mail, telephone, in-person and web-based
surveys, direct or participatory observation, interviews, focus group, expert opinion, case studies,
literature search, and content analysis of internal and external records. The data collection tools
must be strong enough to support the findings of the evaluation.
Collection tools are used to collect the data from the data sources.
Under this study, the questionnaire and telephone interview are used to collect the data. These
are used to collect primary data from the investors.
The secondary data will be collected from internet and news papers.
After data are collected, proper tools and techniques should be used for classification and
analysis of data is very important task because if the researcher goes wrong here the whole study
will go wrong.
Here the researcher used following analysis tools.
1. Simple percentage analysis

2. Mean score.
3. Content Validity ratio
4. Factor analysis
5. Correlation analysis
Simple percentage analysis

Percentage analysis is the method to represent raw streams of data as a percentage (a part in 100%)
for better understandings of collected data.
Mean score
The arithmetic mean (or simply the mean) of a list of number is the sum of the entire list divided by
the number of items in the list. If the list is a statistical, then the mean of that population is called a
population mean. If the list is a statistical sample, we call the resulting statistics a sample mean.
The mean is the most commonly-used type of average and is often referred to simply as the average.
The term “mean” or “arithmetic mean” is preferred in mathematics and statistics to distinguish it from
other average such as the median and the mode.
Correlation analysis
In statistics, Spearman’s rank correlation coefficient or Spearman’s rho, named after Charles
Spearman and often denoted by the Greek letter p (rho) or as rs, is a non –parametric measure of
statistical dependence between two variables. It assesses how well the relationship between two
variables can be described using a monotonic function. If there are no repeated data values, a perfect
Spearman correlation of +1 or -1 occurs when each of the variables is a perfect monotone function of
the other.
Financial literacy refers to the set of skills and knowledge that allows
an individual to make informed and effective decisions through their
understanding of finances. Improving financial education and literacy
standards underpins is a major component in all our work and projects.
Financial literacy means understanding financial products, concepts
and risks, and through information, instructions and/or objective
advise, develop the skills and confidence to become more aware of
financial risks and opportunities, to make informed choices, to know
where to go for help, and to take other effective actions to improve
their financial well being.
Thus financial literacy is the ability to know, monitor and effectively
use financial resources to enhance the well being and economic
security of oneself, one’s family and business, and also for improving
the understanding of the financial service providers. In our case, our
focus of financial literacy will be SHG members and their families and
all other organizations who are involved with them.
The concept of Financial Literacy, is essentially spreading the
knowledge of good money management practices. It
encompasses all monetary transactions that a person enters into such
as earning, spending, saving, borrowing and investing. These
transactions cannot be avoided and they are all integral parts of a
person’s life, and hence the introduction of financial literacy will help
people, especially women to manage these transactions to their
advantage. With financial literacy, poor will have opportunity to learn
skills related to:
a) setting economic goals,
b) making a financial plan,
c) managing cash flow,
d) keeping financial records,
e) minimizing debt,
f) planning for the future,
g) socially responsible actions without jeopardising the environment
or natural resources
.
OBJECTIVES
 To understand the meaning of Financial Literacy
 To identify factors that determine Financial Literacy
 To understand knowledge of Financial Literacy among people
 To understand ways to develop Financial Literacy in an Individual
SCOPE
The scope for studying financial literacy awareness is huge as the study
may differ as per the demographics of the sample size.
This project focuses on Financial literacy awareness among

undergraduate students in Mulund College of Commerce as they will be
Research Methodology
A suffice research was undertaken to meet the objectives of this study
with the collection of both secondary and primary data.
The primary data was collected through a questionnaire designed for a
sample of 100 students in Mulund College Of Commerce.
The secondary data has been collected from various references from
books,magazines,journals and the internet.
Limitations
Since the scope is vast, study was restricted to Awareness among
undergraduate students and thus observations will be limited.
Need for Financial Literacy
The definition of financial literacy is "having the knowledge, skills
and abilities to undertake responsible economic and financial
decisions and actions with a requisite level of competence." The recent
global economic downturn has served to highlight our deficiencies in
this area and has shifted focus to the need for financial education.
The need for financial literacy and its importance for financial
inclusion have been acknowledged by all possible stakeholders -
policymakers, bankers, practitioners, researchers and academics –
across the globe. Various financial literacy programmes have thus been
implemented by concerned institutions, with a lot of them being
unique in their approach and delivery mechanisms. For instance,
programmes have been customized to suit the requirements of
students, microfinance clients, slum dwellers, bank clients etc. Some
programmes have a particular focus such as a specific financial
product, developing saving habit among target group, customer
protection, business management, and so on, while others are more
general and deal with money management skills, advocating healthy
financial practices etc. Varied techniques such as videos, stories,
activities, comic books etc. are used, along with traditional methods of
classroom training. Banks like Punjab National Bank and State Bank
of India have also begun setting up ‘financial literacy and credit
counselling centers’ that people can go to for gathering requisite
information.
While a lot of experimentation has been done in the realm of financial
literacy, it is difficult to point to one standardised method or approach
that works best in all scenarios with all kinds of target populations.
Although this could be attributed to the lack of a standard definition or
measurement tool, it is also a result of India’s diversity in terms of
language, caste, culture etc. Hence, it is challenging to design a
product that ‘fits all’ sections of the population equally well.
Going back to the drawing board, it is important to work with the

premise that financial services’ needs of an individual vary primarily
by age. While these also depend on financial status, social status and
other factors, let us keep that constant and consider the life cycle of a
poor household (primary target beneficiaries of financial literacy
programmes). Children initially stay with parents and go to school.
Following studies, they may move out of the parents’ house and begin
to live on their own (or with friends/ housemates) and earn their own
living. They then get married, form a couple and start their own
family. By this stage, the parents are old, with reduced income levels
because of lower physical capacity to work. They seek support from
their children who have just been endowed with new responsibilities
of a family, with children of their own to raise. The cycle continues
with these children getting educated, moving out to find a job and then
eventually raising their own families, while assisting their parents.
Figure 1. Life cycle of an individual/ household
This simple story of the household involves an exchange of

dependency and responsibilities at each stage. Considering just the
financial services’ needs of the household over its life cycle, we see
that they are very specific to the stage that the household or individual
is in at a given point of time. For instance, as a school going kid (in
his/ her teenage), an individual might require know-how of savings so
that he/ she can save pocket money or scholarship and utilise it
effectively. A young person who has just started working and receiving
a salary, would require a banking service, complex investment
products (given that youth are more inclined to risk-taking and are
open to experimentation) and remittance services that would enable
him/ her to send a portion of earnings to parents who are not able to do
as much physical labour as they could earlier. As time progresses and
the individual gets married and starts a family, he/ she is required to
think about safer financial products and longer term investments. His/
her dependency ratio is highest at this point – both children and
parents are dependent on the individual. As the individual becomes
older, simple banking services are required to access remittances
transferred by children, and welfare transfers from thegovernment.
Considering all of these specific financial services’ requirements at

various junctures in life, four teachable moments can be identified:
school-going child (grown up enough to understand money and
saving), youth (stepping into employment), middle-aged (married, and
starting a family), and old age. These are the specific stages of
transition, when the need for financial products/ services takes a leap
and it is crucial to make the right financial decisions. Thus, these
moments are best suited for receiving and benefitting from customized
money management.
Table 1 maps the four teachable moments with the associated
attributes, along with the work that has been done so far in terms of
implementation of financial literacy initiatives and assessment of the
impact of the initiatives. Analysing each of the stages independently
would throw light on the way forward in designing financial literacy
modules. A cross analysis of these, however, highlights the fact that
there is little or no commonality among them and each is required to
be taught with different instruments varying in content, delivery
mechanism and need for innovation.
Note: This table is based on findings and learning from various studies
conducted by IFMR-LEAD on the subject of financial literacy.
To elaborate, the cognitive ability of a person starts developing when

he/she starts going to school. At this stage, an individual is immature
with low or no understanding of emotions and concept of time. They
take time to solve problems that require abstract thinking. They are
usually attracted to things that are colourful, and are significantly
influenced by games. ‘Learning by doing’ is the mantra that drives
childhood. Kids these days are also involved in social networking.
Although no research has been done to study the impact of any kind of
financial literacy training on school-going kids, instruments like comic
books and concept of saving in a piggy bank seem promising, given
the attributes of their age.
Similarly, a youngster just stepping into employment is characterised

by good sensory abilities and memory skills. Reasoning and logical
thinking are fully developed. At this stage, an individual is highly
ambitious and feels a need for independence, self-reliance and
freedom from authority. Acceptance among peers is equally essential.
Keeping these in mind, some teaching mechanisms like money games,
simulation games and soap operas have been designed and adopted
globally, yielding positive results on financial behaviour of the youth
(Tufano et al 2010).
Skipping to the last teachable moment, no financial literacy

programme focuses on the elderly, and the research on developing a
module for this age group has also been nil. There have, however,
been government initiatives such as the Adult Literacy Programme
that could be used to impart financial education. For such a financial
literacy programme to be designed, attributes like divided attention,
loss of recent memory and slower response to sensory stimulation
need to be considered. Also, their parental experience and affinity to
religious events and activities could be leveraged upon. Occasions of
interest to this age group should be used to bring them together and
learning should be derived from discussions of their experiences in
life.
In contrast to the work in the sphere of financial literacy that has been
done with school-going kids, youth and elderly, various interventions
have been developed and implemented for middle-aged people. This
segment of the population is intellectually sharp but with a relatively
slower reaction time as compared to youngsters. People in this bracket
take time to learn new things but their ability to do so does not change.
They mostly understand things that they can relate to their lives,
families, jobs, adversities etc. A lot of innovative methods have been
adopted to teach them best financial practices, some aligning with
their attributes and others ignoring them. Most of the studies that have
been conducted so far with this particular group illustrate an impact on
financial awareness and knowledge of the participants but limited
effect on their financial behaviour, which in fact, is the key intended
outcome of any financial literacy programme (Cole et al. 2009, Cole
and Shastry 2009). Some implementers believe that incentives, like
bundling financial literacy training with a financial product (for
instance, credit to start a small business) that help the participants to
practice what is preached (fund management, book keeping, inventory
management, etc.) and to visualise the impact of the training for
themselves (increased revenue and profits), are more likely to be
received well and to create an impact. Scientific evidence for the
above is, however, lacking.
One size does not fit allEven though there is no blueprint to a

successful financial literacy programme as yet, taking a cue from the
above mentioned aspects is essential to come closer to designing one.
The efforts that are being put in by stakeholders to empower people
while making them financially literate are commendable but need to
be more focused and customised as the rule of ‘one size fits all’
doesn’t seem to apply in this sphere. Providing the right advice at the
right time and with the right approach is the key and this indicates vast
scope for work and innovation in this field.
Importance of Financial Literacy
The recent global economic downturn has served to highlight our

deficiencies in this area and has shifted focus to the need for financial
education.
Self Assessment Tools
A simple questionnaire that establishes your current financial status is a
great place to start. This will provide you with a greater understanding of
what it is you do know and what it is you need to learn about money
management.
When properly structured, self-assessment tools can assist you to develop
your personal financial goals and to acquire a better sense of what you
will need to make more informed financial choices.
Money Management Basics
Mastering money management basics is crucial. Learning how to
formulate and live within a monthly budget, building savings and creating
wealth, planning for future financial needs, understanding how insurance
products work are all key areas that should be addresed.
Financial literacy is important because it benefits consumers, the financial
system and the economy. Financial literacy causesconsumers to behave in
a particular way, and develop particular attitudes concerning money.
Financial literacy enables people to makebetter financial decisions, to
appreciate their rights and responsibilities as consumers of financial
products, and to understand andmanage risk. Thus, personal financial
literacy ensures and prepares an individual to manage money, credit, and
debt effectively. Betterinformed consumers make more effective choices
and more appropriate decisions. They are less likely to be mis-sold or
mis-buyproducts and services.
The benefits of financial literacy to the household will also bring benefits
to the economy and the financial system which are asfollows:
Benefits to Consumer
Increased saving and retirement planning
More realistic assessments of financial knowledge by consumers
Investing and choosing the right financial products with
confidenceConsumer rights and regulatory intervention
Financial efficiency in the form activity in financial market and debt
management
Benefits to Financial System
Greater competition, innovation and quality products
Disciplined and broader financial market.
Less social security burden.
Benefits to Community
Financial inclusion
Understanding government financial policies
Determinants of financial literacy in an Individual
An individual is said to be financially literate if he/she is able to perform
the following:
Financial knowledge and understanding: The individual should be
aware of the products available in the market. Should possess adequate
knowledge about the basics of the products, the related concepts,
consumer rights of such products and its use.
Choosing appropriate products: Should be able compare similar
products and choose the product which suits their requirement. Financial
knowledge about the various products would enable this.
Financial Planning: The intensity to save and plan for their retirement
life should be clear. Investing in proper avenues or saving through various
investment plans shows their attitude and behaviour towards financial
matters. The studies listed above shows that the financial attitude and
behaviour is highly influenced by financial knowledge possessed by an
individual.
Day to day money management: Financial literacy helps an individual
to have control over his financial matters. It enables an individual to
frame appropriate budgets which in turn helps them to track his finances
and meet the ends.
Scenario in India
While we have become marginally better at saving and planning for the
unexpected and retirement, basic money management still remains a
weak point, shows a recent survey. In terms of overall financial literacy,
India is at the bottom among 16 countries in the Asia-pacific region with
59 index points, according to the annual MasterCard’s index for financial
literacy. Only Japan fared worse with 57 points.
The index is based on a survey conducted between April 2013 and May
2013 with 7,756 respondents aged 18-64 years.
The survey polled consumers on three aspects—basic money
management (50% weight), financial planning (30% weight) and
investment (20% weight)—to arrive at the overall financial literacy index.
On individual parameters, India scored 50 index points in basic money
management, which was lowest among 16 countries. With respect to
financial planning, which involves savings and planning for the
unexpected and retirement, India showed improvement from the last
round of survey and scored 76 index points and for investments it scored
58, one index point lower compared with last year.
The report states that for Indians, “the lack of ability to keep up with
bills, set money aside for big item purchases and to pay off credit cards
fully could be due to a lack of surplus cash, resulting from the fact that
income levels are not high enough to cover expenses”. According to
Desmond Choong, an external analyst who works with MasterCard on
indices and surveys, this can be attributed to inflation. The Consumer
Price Index-based inflation has been around 9-10% for the last two years.
Interestingly, the younger lot seems to be slightly more financially
proficient. The financial literacy scores for Indians aged 30 and above
was 59 compared with 61 for those under 30 years of age. This was an
exception to all the other Asia-Pacific countries where the older cohort
had clearly better financial literacy scores than the younger cohort except
for Indonesia where it was almost a tie between the two segments.
However, given the small sample size and locations chosen for the
survey, it may not be a true reflection of the things on ground. “The
sample is not too big and India is a large country with diverse lifestyle
approaches. So I am not sure how far will this be true for pan-India,” says
Ranjeet S. Mudholkar, vice-chairman and chief executive officer,
Financial Planning Standards Board India.
The survey was conducted with respondents at the urban level, so the
results are particularly for urban Indians “but may to a lesser extent
reflect the situation as well for rural India”, says Choong.
Mudholkar, however, says that the survey can give a good idea from a
country on country perspective. For instance, Hong Kong and Singapore
are comparable in terms of per capita income, population and purchasing
power parity but India operates on a very different sca
STUDY ON FINANCIAL LITERACY IN INDIA BY
EXPERTS
The following section gives the general studies made related to financial
literacy:
Studies by Marcolin and Abraham (2006); Schuchardt et al., (2008);
Remund (2010) and Huston (2010) found that despite the rapid growth of
interest in and funding for financial literacy and financial education
programs, it remains the case that the field of financial literacy has a
major obstacle to overcome: the lack of a widely disseminated measure of
financial literacy, developed through rigorous psychometric analyses.
Michael (2009) argues that a lack of financial literacy can hamper the
ability of individuals to make well-informed financial decisions. For
people who exhibit problems with financial decision making, financial
advice has the potential to serve as a substitute for financial knowledge
and capability.
Agarwalla Sobhesh Kumar, Barua Samir, Jacob Joshy, Jayanth R. Varma
(2012) conducted a study among 3000 individuals, and found that
financial knowledge among Indians is very low than the International
standards. But the financial behaviour and attitude of the employees and
retired seems to be positive. The financial knowledge among the women
are marginally high than the men. Greater access to consumption credits
has influenced the financial behaviour of young employees.
Financial literacy was examined among individuals which showed that
the financial literacy is low and less than one third of the young adult
possess the basic knowledge of interest rates, inflation andrisk
Diversification. Financial literacy was strongly related to socio
demographic characteristics and family financial sophistication.
Specifically, a college educated male whose parents had stocks and
retirement savings was about 45 percentage points more likely to know
about risk diversification than a female with less than a high school
education whose parents were not wealthy (Lusardi, Mitchell and Curto
2006).
Sages and Grable, (2009) in their study found that the individuals who
has the lowest level of financial risk tolerance is the least competent in
terms of financial matters, have the lowest subjective evaluation of net
worth and are less satisfied with their financial management skills. The
level of financial risk tolerance of the individuals determines the financial
behaviour.
9. Investments in Equity
Private equity is a type of asset consisting of equity securities in private
companies that are not publicly traded on stock exchange.
A private equity investment will generally be made by a private equity
firm, a venture capital firm or an angel investor.
Private Equity is expanding at a fast pace. India acquired US $13.5 billion
in 2008 under equity shares and featured among the top 7 nations in the
world. In 2010, the total equity investment is predicted to increase upto
USD 20 billion. Indian equities promise satisfactory returns and have
more than 365 equity investments firms functioning under it.
As ranked by the PEI 300, the 10 largest private equity firms in the world
are:
1.TPG Capital
2.Goldman Sachs Principal Investment Area
3.The Carlyle Group
4.Kohlberg Kravis Roberts
5.The Blackstone Group
6.Apollo Global Management
7.Bain Capital
8.CVC Capital Partners
9.First Reserve Corporation
FINANCIAL EDUCATION
An increased need for financial education is felt in both developed and
developing countries. In developed countries, the increasing number of
financial products, its complexity, importance of retirement savings,
increasedgrowth of secondary market has made the imparting of financial
education imperative for all age groups, including students so that
individuals are educated about financial matters as early as possible in
their lives. In thedeveloping countries, the growing number of investors,
technically advanced financial markets, liberalisedeconomy etc.
necessitates imparting of financial education for better operation of
markets and economy and inthe interest of investor. Further imparting of
financial education is international concern due to growth ofinternational
transactions, international financial instruments like ADR, GDR, IDR
etc., mobility of individuals from one country to another etc.
Components of Financial Education
The importance of starting now!
Time value of money and compound interest.
Planning and budgeting.
Credit and debit.
Investment and savings.
Implication of taxes.
Protecting your money
INITIATIVES TAKEN SO FAR ON FINANCIAL LITERACY IN
INDIA
RBI's initiatives
Reserve Bank of India has undertaken a project titled "Project Financial

Literacy". The objective of this project is to disseminate information
regarding the central bank and general banking concepts to various target
groups,including school and college students, women, rural and urban
poor, defense personnel and senior citizens.The project envisages a multi
pronged approach. The project has been designed to be implemented in
twomodules, one module focusing on the economy, RBI and its activities,
and the other module on general banking.The material is created in
English and other vernacular languages. It is disseminated to the target
audience withthe help of banks, local government machinery, schools and
colleges through presentations, pamphlets, brochures,films and also
through RBI's website.
SEBI Initiatives
Securities Exchange Board of India has embarked financial education on

a nationwide campaign. To undertake financial education to various target
segments viz. school students, college students, working executives,
middleincome group, home makers, retired personnel, self help groups
etc., SEBI has empanelled Resource Personsthroughout India.
The Resource Persons are given training on various aspects of finance
and equipped with theknowledge about the financial markets. These SEBI
Certified Resource Persons organise workshops to thesetarget segments
on various aspects viz. savings, investment, financial planning, banking,
insurance, retirementplanning etc.Investor education programs are
conducted by SEBI through investor associations all over the country.
Regionalseminars are conducted by SEBI through various stakeholders
viz. Stock Exchanges, Depositories, MutualFunds Association,
Association of Merchant Bankers etc. SEBI has a dedicated website for
investor educationwherein study materials are available for
dissemination. SEBI also publishes study materials in English
andvernacular languages. Under "Visit SEBI” programme, School and
college students are encouraged to visitSEBI and understand its
functioning. SEBI has recently set up SEBI Helpline in 14 languages
wherein througha toll free number, investors across the country can
access and seek information for redressal of their grievancesand guidance
on various issues.
Ministry of Corporate Affairs(MCA) Initiatives
Financial literacy allows to fully appreciate opportunities and associated

risks, take informed decisions and participate actively in the economic
growth story of the country by converting saving into investments.
Ministry ofCorporate Affairs (MCA) has a dedicated approach for
empowering investors through education and awarenessbuilding.
MCA on 27th September, 2007 launched a website www.iepf.gov.in. It

provides information about IEPF and the various activities that have been
undertaken/ funded by it. This website provides information on various
aspectssuch as role of capital market, IPO investing, Mutual Fund
Investing, Stock Investing, Stock Trading, DepositoryAccount, Debt
Market, Derivatives, Indices, Indices (comic strip), Index Fund, Investor
Grievances & Arbitration(Stock Exchanges), Investor Rights &
Obligations, Do’s and Don’ts etc.Ministry of Corporate Affairs has taken
various initiatives to educate investors, particularly, since 2001, the
Investor Education and Protection Fund (IEPF) has been working for
educating the investors and for creating greater awareness about
investments in the corporate sector.
IRDA'S Initiatives on Financial Education

Insurance Regulatory and Development Authority has taken various
initiatives in the area of financial literacy. Awareness programmes have
been conducted on television and radio and simple messages about the
rightsand duties of policyholders, channels available for dispute redressal
etc. have been disseminated throughtelevision and radio as well as the
print media through sustained campaigns in English, Hindi and 11 other
Indian languages.
IRDA conducts an annual seminar on policy holder protection and
welfare and also partiallysponsors seminars on insurance by consumer
bodies. IRDA has got a pan India survey on awareness levelsabout
insurance carried out through the NCAER in a bid to improve on its
strategy of crating insurance awareness.IRDA has also brought out
publications of 'Policyholder Handbooks' as well as a comic book series
on insurance.A dedicated website for consumer education in insurance is
on the verge of launch IRDA's Integrated Grievance Management System
(IGMS) creates a central repository of grievances acrossthe country and
provides for various analyses of data indicative of areas of concern to the
insurance policyholder.
PFRDA Initiatives on Financial Education
The Pension Fund Regulatory and Development Authority, India's

youngest regulator has been engaged in spreading social security
messages to the public. PFRDA has developed FAQ on pension related
topics on its
web, and has been associated with various non government organizations
in India in taking the pension services to the disadvantaged community.
PFRDA's initiatives have become more broad-based with direct mass
publicity on NPS - both as individual model through POPs and group
models through Aggregators. PFRDA has issued advertisements in print
mediaand electronic media through radio and television. PFRDA
appointed intermediaries are called Aggregators whoare directly
responsible for pension awareness mostly in vernacular languages and in
line with socio-economic sensibilities.
Market players Initiatives on Financial Education
Commercial banks are increasingly realizing that they are missing out on
large segment of financially illiterate and excluded segment of
prospective customers. Also, in view of the national emphasis on
electronic benefit
transfer the commercial banks have initiated various measures for
creating awareness through Financial Literacy and Counseling Centers
and Rural Self Employment Training Institutes on financial literacy. The
objective of
these centers is to advise people on gaining access to the financial system
including banks, creating awareness among the public about financial
management, counseling people who are struggling to meet their
repaymentobligations and help them resolve their problems of
indebtedness, helping in rehabilitation of borrowers indistress etc. Some
of these credit counseling centers even train farmers/women groups to
enable them to starttheir own income generating activities to earn a
reasonable livelihood. Even top management of commercialbanks is
What more is to be done for financial inclusion?
undertaking Outreach visits to villages with a view to spread financial

literacy. Similarly, many Stock Exchanges, Broking Houses and Mutual
Funds have initiatives in the field of financial education that
spawnsconducting of seminars, issuance of do's and don'ts, and
newspapercampaigns. Insurancecompanies too, carry out campaigns and
other educational activities for generic education in insurance
Financial Inclusion
Financial inclusion or inclusive financing is the delivery of financial
services at affordable costs to sections of disadvantaged and low-income
segments of society, in contrast to financial exclusion where those
services are not available or affordable.
Why Financial Inclusion in India is Important?

The policy makers have been focusing on financial inclusion of Indian
rural and semi-rural areas primarily for three most important pressing
needs:
1. Creating a platform for inculcating the habit to save money – The
lower income category has been living under the constant shadow of
financial duress mainly because of the absence of savings. The absence of
savings makes them a vulnerable lot. Presence of banking services and
products aims to provide a critical tool to inculcate the habit to save.
Capital formation in the country is also expected to be boosted once
financial inclusion measures materialize, as people move away from
traditional modes of parking their savings in land, buildings, bullion, etc.
2. Providing formal credit avenues – So far the unbanked population
has been vulnerably dependent of informal channels of credit like family,
friends and moneylenders. Availability of adequate and transparent credit
from formal banking channels shall allow the entrepreneurial spirit of the
masses to increase outputs and prosperity in the countryside. A classic
example of what easy and affordable availability of credit can do for the
poor is the micro-finance sector.
3. Plug gaps and leaks in public subsidies and welfare programmes –
A considerable sum of money that is meant for the poorest of poor does
not actually reach them. While this money meanders through large system
of government bureaucracy much of it is widely believed to leak and is
unable to reach the intended parties. Government is therefore, pushing for
direct cash transfers to beneficiaries through their bank accounts rather
than subsidizing products and making cash payments. This laudable effort
is expected to reduce government’s subsidy bill (as it shall save that part
of the subsidy that is leaked) and provide relief only to the real
beneficiaries. All these efforts require an efficient and affordable banking
system that can reach out to all. Therefore, there has been a push for
financial inclusion.
What are the steps taken by RBI to support financial inclusion?
RBI set up the Khan Commission in 2004 to look into financial inclusion
and the recommendations of the commission were incorporated into the
mid-term review of the policy (2005–06) and urged banks to review their
existing practices to align them with the objective of financial inclusion.
RBI also exhorted the banks and stressed the need to make available a
basic banking 'no frills' account either with 'NIL' or very minimum
balances as well as charges that would make such accounts accessible to
vast sections of the population.
Of the many schemes and programmes pushed forward by RBI the
following need special mention:
A. Initiation of no-frills account – These accounts provide basic
facilities of deposit and withdrawal to accountholders makes banking
affordable by cutting down on extra frills that are no use for the lower
section of the society. These accounts are expected to provide a low-cost
mode to access bank accounts. RBI also eased KYC (Know Your
customer) norms for opening of such accounts.
B. Banking service reaches homes through business correspondents –

The banking systems have started to adopt the business correspondent
mechanism to facilitate banking services in those areas where banks are
unable to open brick and mortar branches for cost considerations.
Business Correspondents provide affordability and easy accessibility to
this unbanked population. Armed with suitable technology, the business
correspondents help in taking the banks to the doorsteps of rural
households.
C. EBT – Electronic Benefits Transfer – To plug the leakages that are

present in transfer of payments through the various levels of bureaucracy,
government has begun the procedure of transferring payment directly to
accounts of the beneficiaries. This “human-less” transfer of payment is
expected to provide better benefits and relief to the beneficiaries while
reducing government’s cost of transfer and monitoring. Once the benefits
starts to accrue to the masses, those who remain unbanked shall start
looking to enter the formal financial sector.
Financial inclusion of the unbanked masses is a critical step that requires
political will, bureaucratic support and dogged persuasion by RBI. It is
expected to unleash the hugely untapped potential of the bottom of
pyramid section of Indian economy. Perhaps, financial inclusion can
begin the next revolution of growth and prosperity.
HOW TO DEVELOP FINANCIAL LITERACY

It is never too early, or too late, to begin developing financial literacy,
taking control of your finances, and putting yourself on the path to
financial security. Being financially literate allows one to earn more,
spend less, and get the things he or she really wants. To develop financial
literacy at any age, follow these steps.
Become familiar with your household finances
Know how much money you have coming in, how much goes out, and
where it goes. There are several things that you can do to familiarize
yourself with your finances:
1. Review your bank statements. Find out how much of your money
goes into the bank and for what, other than your monthly bills, it
comes out.
2. Go through your monthly bills. You should know exactly whom
you pay each month, for what, and how much you pay them.
3. Scrutinize your credit card statements. Learn how much you pay on
your cards each month, what your total balance is, and how you
use your cards.
4. Track your loans. Know how much you owe and how long it will
take to pay if off making the regular monthly payment each month.
5. Review investment account statements. Find out where your
money is invested, and how much that investment is earning you
each year.
6. Obtain a copy of your credit report and read it. You are entitled to
one free copy each year from each of the three credit reporting
agencies
Set a financial goal.
Financial responsibility is easier when you are working towards a goal.
Decide to remodel the bathroom, purchase a new vehicle, or upgrade your
television set. It does not matter what your goal is, just that it is
something you want for which you will have to save.
DATA ANALYSIS
Develop a budget and stick to it.

Once you know how much money you have coming in and going out, and
you have a financial goal, you will need to develop a budget that allows
you to save towards your goal. To develop a budget that you can stick
with:
 Keep a record of your monthly spending for several months.
Include groceries, gasoline, clothing, lunches and dinners out, dry
cleaning, school expenses, etc. You want to be sure that your record
is an accurate picture of how you spend your money.
 Write a spending plan using your spending record as a guide,
eliminating unnecessary expenses, and decreasing those, which
may be too high.
 Revise your budget as necessary. When monthly bills change or are
eliminated, your financial goals become different, or your income
increases or decreases, a change in the budget is necessary. Your
budget must be flexible in order for you to stick with it.
Discuss finances openly and honestly, and stay involved.

Generally, one spouse is in charge of the finances, but that is no excuse
for the other to not know where the money goes, and be involved in
financial decisions. You do not have to know where every dime your
spouse spends goes, nor does he or she need to know where every dime
you spend goes, but you should both be aware of your financial situation
and be involved in the big financial decisions.
Learn the difference between good debt and bad debt.

Not all debt is created equal. Here is how to tell the good debt from the
bad debt:
 Debt, which creates value and helps you to build wealth, is good
debt. The most common example of good debt is a mortgage. The
value of the home increases as the amount of the debt decreases
and you build equity in the home. School loans are also considered
good debt because of the potential value of a degree you earn
acquiring the debt.
 Debt, which continues to increase, as the item purchased with it
decreases, is bad debt. Credit cards are the number one bad debt
among consumers. The items purchased on the card decrease in
value, while the interest you are charged on them increases each
month you do not pay off the credit card. Car loans are also bad
debt because the value of the car decreases more quickly than the
principle of the loan.
BUDGET AND TRACK
Cumulative
Frequency Percent Valid Percent Percent
Valid not at all true 11 22.0 22.0 22.0
not true 1 2.0 2.0 24.0
neutral 20 40.0 40.0 64.0
true 16 32.0 32.0 96.0
very true 2 4.0 4.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 22% of respondents were not at all agreed that they do budget
and track spending.
2. 2% of respondents were not agreed that they do budget and track spending.
3. 40% of respondents were neutral agreed that they do budget and track spending.
4. 32% of respondents were agreed that they do budget and track spending.
5. The remaining 4% of respondents were very much agreed that they do budget and track
spending.
COMPARE PURCHASE TO M. STATEMENT
Cumulative
not true 12 24.0 24.0 34.0
neutral 12 24.0 24.0 58.0
true 16 32.0 32.0 90.0
very true 5 10.0 10.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 10% of respondents were not at all agreed that they compare
their receipts of purchases to their monthly statements
2. 24% of respondents were not agreed that they compare their receipts of purchases to their
monthly statements
3. 24% of respondents were neutral agreed that they compare their receipts of purchases to
their monthly statements
4. 32% of respondents were agreed that they compare their receipts of purchases to their
monthly statements
5. The remaining 10% of respondents were very much agreed that they compare their
receipts of purchases to their monthly statements
CONTRIBUTION TO SAVINGS
Cumulative
not true 12 24.0 24.0 30.0
neutral 14 28.0 28.0 58.0
true 15 30.0 30.0 88.0
very true 6 12.0 12.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 6% of respondents were not at all agreed that they contribute to
a savings account regularly.
2. 24% of respondents were not agreed that they contribute to a savings account regularly.
3. 28% of respondents were neutral agreed that they contribute to a savings account
regularly.
4. 30% of respondents were agreed that they contribute to a savings account regularly
5. The remaining 12% of respondents were very much agreed that they contribute to a
savings account regularly.
6.
COPARE RATES WHEN PUCHASE
Cumulative
not true 8 16.0 16.0 20.0
neutral 14 28.0 28.0 48.0
true 17 34.0 34.0 82.0
very true 9 18.0 18.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 4% of respondents were not at all agreed that they compare rates
when shopping for purchases
2. 16% of respondents were not that they compare rates when shopping for purchases
3. 28% of respondents were neutral agreed that they compare rates when shopping for
purchases
4. 34% of respondents were agreed that they compare rates when shopping for purchases
5. The remaining 18% of respondents were not at all agreed that they compare rates when
shopping for purchases
HAVE LIC
Cumulative
not true 8 16.0 16.0 44.0
neutral 3 6.0 6.0 50.0
true 12 24.0 24.0 74.0
very true 13 26.0 26.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 28% of respondents were not at all agreed that they have a LI
policy.
2. 16% of respondents were not agreed that they have a LI policy.
3. 6% of respondents were neutral agreed that they have a LI policy.
4. 24% of respondents were agreed that they have a LI policy.
5. The remaining 26% of respondents were very much agreed that they have a LI policy.
INCREASE FINANCIAL KNOWLEDGE
Cumulative
not true 14 28.0 28.0 30.0
neutral 13 26.0 26.0 56.0
true 18 36.0 36.0 92.0
very true 4 8.0 8.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 2% of respondents were not at all agreed that they read to
increase their financial knowledge.
2. 28% of respondents were not agreed that they read to increase their financial knowledge.
3. 26% of respondents were neutral agreed that they read to increase their financial
knowledge.
4. 36% of respondents were agreed that they read to increase their financial knowledge.
5. The remaining 8% of respondents were very much agreed that they read to increase their
financial knowledge.
CONTRIBUTE I. ACCOUNT
Cumulative
not true 12 24.0 24.0 28.0
neutral 19 38.0 38.0 66.0
true 12 24.0 24.0 90.0
very true 5 10.0 10.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 4% of respondents were not at all agreed that they contribute to
an investment account.
2. 24% of respondents were not agreed that they contribute to an investment account.
3. 38% of respondents were neutral agreed that they contribute to an investment account.
4. 24% of respondents were agreed that they contribute to an investment account.
5. The remaining 10% of respondents were very much agreed that they contribute to an
investment account.
PARENTS INFLUENCE
Cumulative
Valid none 2 4.0 4.0 4.0
not much 1 2.0 2.0 6.0
some 14 28.0 28.0 34.0
a lot 33 66.0 66.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 4% of the respondents have no parental influence

2. 2% of the respondents have not much parental influence
3. 28% of the respondents have some parental influence
4. 66% of the respondents have a lot parental influence
FRIENDS INFLUENCE
Cumulative
Valid none 6 12.0 12.0 12.0
not much 12 24.0 24.0 36.0
not applicable 7 14.0 14.0 50.0
some 20 40.0 40.0 90.0
a lot 5 10.0 10.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 12% of the respondents have no influence
2. 24% of the respondents have not much influence
3. 14% of the respondents are not applicable
4. 40% of the respondents have some influence
5. 10% of the respondents have a lot influence
SCHOOL INFLUENCE
Cumulative
Valid none 6 12.0 12.0 12.0
not much 12 24.0 24.0 36.0
some 20 40.0 40.0 86.0
a lot 7 14.0 14.0 100.0
Total 50 100.0 100.0
INTERPRETATION

BOOKS INFLUENCE
Cumulative
Valid none 6 12.0 12.0 12.0
not much 3 6.0 6.0 18.0
some 16 32.0 32.0 88.0
a lot 6 12.0 12.0 100.0
Total 50 100.0 100.0
INTERPRETATION
MEDIA INFLUENCE
Cumulative
Valid none 4 8.0 8.0 8.0
not much 6 12.0 12.0 20.0
some 14 28.0 28.0 80.0
a lot 10 20.0 20.0 100.0
Total 50 100.0 100.0
INTERPRETATION
JOB INFLUENCE
Cumulative
Valid none 6 12.0 12.0 12.0
not much 4 8.0 8.0 20.0
some 10 20.0 20.0 74.0
a lot 13 26.0 26.0 100.0
Total 50 100.0 100.0
INTERPRETATION
INTERNET INFLUENCE
Cumulative
Valid none 2 4.0 4.0 4.0
not much 7 14.0 14.0 18.0
some 16 32.0 32.0 96.0
a lot 2 4.0 4.0 100.0
Total 50 100.0 100.0
INTERPRETATION
SEMINAR & CLASS INFLUENCE
Cumulative
Valid none 4 8.0 8.0 8.0
not much 4 8.0 8.0 16.0
some 21 42.0 42.0 86.0
a lot 7 14.0 14.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F. PLANNER OR COUNSELOR INFLUENCE
Cumulative
Valid none 5 10.0 10.0 10.0
not much 3 6.0 6.0 16.0
some 15 30.0 30.0 76.0
a lot 12 24.0 24.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F. DISCUSSION WITH PARENTS
Cumulative
Valid never 4 8.0 8.0 8.0
once per year 8 16.0 16.0 24.0
twice per month 10 20.0 20.0 44.0
twice per month 14 28.0 28.0 72.0
weekly 14 28.0 28.0 100.0
Total 50 100.0 100.0
INTERPRETATION
2. 16% of the respondents are influenced once per year
3. 20% of the respondents are influenced every two months
4. 28% of the respondents are influenced twice per month
5. 28% of the respondents are influenced weekly
F. DISCUSSION WITH SCHOOL
Cumulative
Valid never 23 46.0 46.0 46.0
once per year 13 26.0 26.0 72.0
every few months 7 14.0 14.0 86.0
twice per month 3 6.0 6.0 92.0
weekly 4 8.0 8.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F. DISCUSSION WITH BOOKS
Cumulative
Valid never 25 50.0 50.0 50.0
once per year 1 2.0 2.0 52.0
weekly 5 10.0 10.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F. DISCUSSION WITH MEDIA
Cumulative
Valid never 19 38.0 38.0 38.0
once per year 11 22.0 22.0 60.0
weekly 6 12.0 12.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F. DISCUSSION WITH JOB
Cumulative
Valid never 17 34.0 34.0 34.0
once per year 7 14.0 14.0 48.0
twice per month 12 24.0 24.0 92.0
weekly 4 8.0 8.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F. DISCUSSION WITH INTERNET
Cumulative
Valid never 15 30.0 30.0 30.0
once per year 4 8.0 8.0 38.0
weekly 11 22.0 22.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F.DISCUSSION WITH SEMINAR
Cumulative
Valid never 13 26.0 26.0 26.0
once per year 9 18.0 18.0 44.0
every few month 16 32.0 32.0 76.0
weekly 7 14.0 14.0 100.0
Total 50 100.0 100.0
INTERPRETATION
F. DISCUSSION WITH COUNSELOR
Cumulative
Valid never 20 40.0 40.0 40.0
once per year 9 18.0 18.0 58.0
every few month 12 24.0 24.0 82.0
weekly 6 12.0 12.0 100.0
Total 50 100.0 100.0
INTERPRETATION
COMPARING WITH YOUR PARENTS
Cumulative
Valid much more likely 7 14.0 14.0 14.0
somewhat more likely to

16 32.0 32.0 46.0
save
about as likely to save 21 42.0 42.0 88.0
somewhat more likely to

5 10.0 10.0 98.0
spend
much more likely to spend 1 2.0 2.0 100.0
Total 50 100.0 100.0
INTERPRETATION
1. From the above analysis 14% of the respondents much more likely to save
2. 32% of the respondents are somewhat more likely to save
3. 42% of the respondents are likely to save
4. 10% of the respondents are somewhat more likely to spend
5. 2% of the respondents are much more likely to spend
FINDINGS AND SUGGESTIONS
FINDINGS
Findings of the study are given below
Financial literacy is a powerful predictor for demand for financial literacy
1. Educational qualification and financial literacy is the positively co related

2. U.G background and financial literacy is positively co related
3. 64% of the respondent are male and remaining 36% are female
4. 70% of the respondent are in the age of between 18-22 ,The remaining 30% are in age
between 23-25
5. 42% of the respondents parental income are between1-3 lakhs,22% of the respondents
parental annual income are below lakhs.
6. 345 of the respondents UG background are Bsc .265 of the respondents UG background
are B.com
7. 62% of the respondent have no work experience
8. 44% of the respondents fathers schooling are high school
9. 88% of respondents paid their college education by parents.
10. 54% of respondents are interested in finance area of specialization
11. 68% of respondents are interested in personal finance counseling.
12. 58% of respondents are some what sure at about their ability to manage their own finance
13. 465 of respondents are very interested in increasing their financial knowledge
14. 50% of respondents are given very important in maintaining adequate financial record.
15. 605 of respondents are given very important in spending less than from their income
16. 54% of respondents are given somewhat important in maintaining adequate insurance
coverage
17. 64% of respondents are given very important in planning and implementing a regular
savings/investment programe.
18. 545 of respondents are control their financial situation
19. 40% of respondents are agreed in capable of using their future income to achieve their
financial goal
20. 42% of respondents are neutraly agreed that their finances are a significant source of
worry or “hassle” for them.
21. 38% of respondents are not agreed that they are uncertain about where their money is
spent.
22. 28% of respondents are agreed that credit cards are safe and risk free
23. 345 of respondents are agreed that purchasing things are very important to their
happiness.
24. 50% of respondents are agreed that capable of handling their financial future.
25. 30% of the respondent are not agreed that they are afraid of credit and credit cards.
26. 44% of respondents are neutral that they feel the cost of using a credit card is too high.
27. 40% of respondents are agreed that they feel putting away money each month for saving
or investment is important.
28. 42% of respondent are agreed that having life insurance is an important way to protect
loved ones
29. 50% of the respondents are agreed that they enjoy thinking about and have interested
investing about money management
30. 345 of the respondents are neutral agreed that they enjoy talking to their friends about
money management.
31. 30% of respondent are somewhat spending oriented.
32. 505 of the respondent are maintain minimum financial records.
33. 405 of respondent were neutral agreed that they do budget and track spending
34. 325 of respondents were agreed that they compare their receipts of purchases to their
monthly statements.
35. 305 of respondent were agreed that they contribute to a savings account regularly.
36. 345 of respondents were agreed that they compare rates when shopping for purchases.
37. 285 of respondent have no LIC policy.
38. 36% of respondent were agreed that they read to increase their financial knowledge.
39. 385 of respondents were neutral agreed that they contribute to an investment account.
40. 665 of the respondents have a lot parental influence.
41. 40% of the respondent have some influence on friends.
42. 40% of the respondent have some influence on school.
43. 38% of the respondent are not influenced by books.
44. 32% of the respondents are not applicable to media.
45. 34% of the respondents are not applicable to top influence.
46. 46% of the respondent have no internet influence.
47. 42% of the respondent have some influence by seminar and class.
48. 30% of the respondents have some influence by planner or counselor.
49. 28% of the respondents will discuss the financial matters with the parents.
50. 46% of the respondents have no influence on discussion with school.
51. 505 of the respondents have no influence on discussion with books.
52. 32% of the respondents have no influence with media.
53. 34% of the respondents have no discussion in job.
54. 30% of the respondents have no discussion with internet.
55. 32% of the respondents are various discussions with seminar every two months.
56. 40% of the respondents haven’t discussion with counselor.
57. 42% of the respondents are literacy to save.
58. 52% of the respondents haven’t agreed that company stock than mutual fund.
59. 54% of the respondents are agreed that stock are normally riskier than bond.
60. 42% of the respondents are agreed that asset normally gives the higher return.
61. 76% of the respondents agreed that stock display the higher fluctuation over time.
62. 50% of the respondents states that spreading money among different asset decrease the
.Brenda J cude,
.Frances c Lawrence,
Lousiana,
risk of loosing money.
SUGGESTIONS
They should opt a financial consultancy service to improve their students financial literacy.
Daily 1 hour class for financial literacy
College should encourage students in gaining work experience.
CONCLUSION
This study is conducted in happy valley business school to test the financial literacy of students.
This study reveals that financial literacy has 3 components managing, income and expenditure,
knowledge and skills future financial planning. The other part of the study reveals that parental
knowledge is affecting the financial knowledge of students. This study is conducted on a short
span of period of time so there may be some disadvantages of that.
BIBILOGRAPHY
1. Dr. Rajendra Nargundhar. (2007), Marketing research 2nd edition, published by TATA
McGraw HILL, page number; 246-260, 312-320
2. Measuring Financial capability: an exploratory study
Prepared for the financial services authority by personal finance research centre,
University of Bristol
3. Angela c,Lyons: Credit cards,Gender,Attitude towards credit, Marital status
This is a study conducted by students of Happy Valley B-School to find out
the Financial Literacy Of Youth. Your kind response will be helpful to us.
Thank you
FINANCIAL ATTITUDES
1.How sure do you feel about your ability to manage your own finances?
1). Not sure at all-I wish I knew a lot more about money management
2). Not too sure-I wish I knew more about money management
3). somewhat sure-I understand most of what I’ll need to know
4). Very sure-I understand money management very well
2. How interested are you in increasing your financial knowledge? Why?
1). Very uninterested
2). Somewhat uninterested
3). Not sure
4). Somewhat interested
5). Very interested
3. Using the scales given below, please rate the importance of items to you((1) Not
important(2)Somewhat unimportant (3) Not sure (4) somewhat important (5) Very important
items Not Somewhat Not sure somewhat Very

important unimportant important important
a. Maintaining adequate financial
record
Spending less than your income
c. Maintaining adequate
insurance coverage
d.Planning and implementing a
regular savings/investment
program
4. Rate the following items on a scale of 1-5 (1=not at all true of me and 5=very true of me)
Financial Literacy of youth not at all Not true Neutral true very true
true
a. I feel in control of my financial
situation
b. I feel capable of usln my future

income to achieve my financial goals
c. My finances are a significant source

of worry or "hassle" for me
d. I am uncertain about where my

money is spent
e. I feel credit cards are safe and risk

free
f. Purchasin thin s is very important

to my happiness
g. I feel capable of handling my

financial future (e.g. buying insurance
or investments)
h. I am afraid of credit and credit
cards
i. I feel the cost of usin a credit card is

too high
j. I feel putting away money each

month for savings or investments is
important
k. I feel having life insurance is an

important way to protect loved ones
l. I enjoy thinking about and have

interest in reading about money
management
m.I enjoy talking to my friends about
money management issues(i.e. Taxes,
investment ,credit cards)
FINANCIAL BEHAVIORS
5. Some people tend to be very thrifty, saving money whenever they have the chance
while others are spending-oriented, buying whenever they can and even borrowing to
consume more. How would you classify yourself?
1. Very thrifty, saving money whenever I can
2. Some what thrifty, often saving money
3. Neither thrifty nor spending oriented
4. Somewhat spending-oriented, seldom saving money
5. Very spending-oriented, hardly ever saving money
6. What kind of financial accounts do you have? (Check all that apply)
1. Savings
2. Money market
3. Certificate of deposit (CD)
4. Stocks
5. Bonds
6. Mutual funds
7. FD
7. Respond to the following questions on credit cards: (if you have no credit cards
skip to question 10)
a. How many credit cards do you have?
1 2 3 4 Above 4
b. How do you usually pay your monthly credit card bills?
1. I pay the minimum
2. I pay between the minimum and full amount
3. I pay credit bills in full
4. My parents pay my credit card bill

8. In what manner do you maintain financial records?
1. Maintain no records
2. Maintain minimal records
3. Maintain very detailed records
9. Rate the following items on a scale of 1-5 (1 = not at all true of me and 5 =very true of
Me)
items not at all Not true Neutral true Very

true true
a. I budget and track spending.
b. I compare my receipts of purchases to

my monthly statement.
c. I contribute to a savings account
regularly.
d. I compare races when shopping for
purchases.
e. I have a life insurance policy.
f. I read to increase my financial

knowledge.
g. I contribute to an investment account.
INFLUENCES
10. Rate the following influences on a scale of 1-5 (1 =none, 2 = not much, 3 = not applicable,
4 some, 5 =a lot). How much did you learn about managing your money from the following:
Influences none not not some a lot

much applicable
Parents
Friends
School
Books
Media
Job
Internet
Informal public seminar or class
Financial planner or counselor
11. Rate the following on a scale of 1-5 (1 = never, 2 =once per year, 3 =every few
=
months, 4 twice per months = weekly). How often were you influenced by or did you
discuss finances with the following:
Influences never once per every few twice per weekly
year months month
Parents
Friends
School
Books
Media
Job
Internet
Informal public seminar or class
Financial planner or counselor
12. Which of the following items did you learn about in your home while growing up?
(Check all that apply)
Budgeting Credit Card
Investing Loans
Taxes Savings
Life Insurance Interest rate
Giving to charities Keeping records
Vehicle Being insurance honest in all dealings
Work what you receive other
13. Where do you expect to learn/ increase our financial knowledge? (check all that
apply)
Parents Friends School Books
Media Job Life experience Financial

14. How would you describe how finances were handled in your family? (Check all that
apply)
1. My parents usually argued about the finances
2. Within the family we openly discussed our finances
3. My parents explicitly taught me about finance

(e.g., credit cards, debt, budgeting, savings)
4. We didn't' talk much about finances but I learned from their examples
5. My parents included me in various financial decisions
15. Comparing yourself to your parents, would you say that you are:
1. Much more likely to save
2. Somewhat more likely to save
3. About as likely to save/spend
4. Somewhat more likely to spend
5. Much more likely to spend
FINANCIAL KNOWLEDGE
16. Net worth is:
1. The difference between expenditures and income
2. The difference between liabilities and assets
3. The difference between cash inflow and outflow
4. The difference between borrowings and savings
5. None of the above
17. Which of the following statements describes the main functions of the stock market?
1. The stock market helps to predict stock earnings
2. The stock market results in an increase in the price of stock
3. The stock market brings people who want to buy stocks together with those who want to self start
5. Don’t know
18. Which of the following statement correct?
1. Ones one invests in a mutual fund one cannot withdraw money in the first year.
2. Mutual fund can invest in several assets
Eg: Invest in both stock and bonds
3. Mutual fund pay a guarantee d rate of return which depends on their past performance.
5. Don’t know
19. If the interest rate falls, what should happened on bond price
1. Rise 2.Fall 3.Stay the same
4. None of the above 5. Don’t Know
20. Buying a company stock usually provides a safer return than a stock mutual fund
1. True 2, False 3.Don’t know
21. Stocks are normally riskier than bonds
1. True 2, false 3. Don‘t know
22. Considering a long time period (For e g: 10 or 20 years) which asset normally gives the highest
return
1. Savings A/c 2.Bonds 3.Stocks 4.Don’t know
23. Normally which assets display the highest fluctuation over time.
1. Savings A/c 2.Bonds 3.Stocks 4.Don’t know
24. When an investor spreads his money among different assets does the risk of losing money:
1. Increase 2.Decreace 3.Stay the same 4.Don’t know

PERSONAL INFORMATION
Name:
Gender: Male Female
Age: 18-22 23-25 Above 25
Specify the U.G
B.com BBM B.com- CA B .E Bsc
Parental Income(Annual Income)
Below 1 lakh 1-3 lakh 3 -5 lakh Above 5 lakh
How many years of work experience(Including full and part time)
Now Less 2 2-4Year above 4 year
Father’s Occupation
Mother’s Occupation
What is the highest level of schooling your father has completed?
Less than High school High school
Bachelor Degree Master Degree
My college education is paid by(including who will pay off students loan)
Self 100% Parents 100% 50% Self 50% Parents
Area of specialization you want to choose
Marketing Finance HRM
Would you take a personal finance counseling to improve your financial management skills?
Yes No
THANK YOU for your valuable information………………..

Financial Literacy of Youth

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CONTENTS

Sl. No. DESCRIPTION PAGE NO.

2 OBJECTIVES OF THE STUDY

3 SCOPE OF THE STUDY

4 LIMITATIONS OF THE STUDY

10 RESULTS AND DISCUSSION

11 FINDINGS & SUGGECTIONS

16 CONTROL OF FINANCIAL SITUATION

24 COST OF CREDIT CARD

According to some experts financial literacy has four discrete aspects:

Limitations of the study

Examples of non probability sampling include:

 Convenience, haphazard or Accidental sampling- Members of the population are

Here the researcher has purposive sampling.

Data are classified into two:

Data collection tools:

Here the researcher used following analysis tools.

1. Simple percentage analysis

Simple percentage analysis

 To identify factors that determine Financial Literacy

 To understand knowledge of Financial Literacy among people

 To understand ways to develop Financial Literacy in an Individual

This project focuses on Financial literacy awareness among

Going back to the drawing board, it is important to work with the

This simple story of the household involves an exchange of

Considering all of these specific financial services’ requirements at

To elaborate, the cognitive ability of a person starts developing when

Similarly, a youngster just stepping into employment is characterised

Skipping to the last teachable moment, no financial literacy

One size does not fit allEven though there is no blueprint to a

The recent global economic downturn has served to highlight our

Reserve Bank of India has undertaken a project titled "Project Financial

Securities Exchange Board of India has embarked financial education on

Ministry of Corporate Affairs(MCA) Initiatives

Financial literacy allows to fully appreciate opportunities and associated

MCA on 27th September, 2007 launched a website www.iepf.gov.in. It

IRDA'S Initiatives on Financial Education

PFRDA Initiatives on Financial Education

The Pension Fund Regulatory and Development Authority, India's

undertaking Outreach visits to villages with a view to spread financial

Why Financial Inclusion in India is Important?

What are the steps taken by RBI to support financial inclusion?

B. Banking service reaches homes through business correspondents –

C. EBT – Electronic Benefits Transfer – To plug the leakages that are

HOW TO DEVELOP FINANCIAL LITERACY

Develop a budget and stick to it.

Discuss finances openly and honestly, and stay involved.

Learn the difference between good debt and bad debt.

Valid not at all true 11 22.0 22.0 22.0

not true 1 2.0 2.0 24.0

neutral 20 40.0 40.0 64.0

true 16 32.0 32.0 96.0

very true 2 4.0 4.0 100.0

Total 50 100.0 100.0

Valid not at all true 5 10.0 10.0 10.0

not true 12 24.0 24.0 34.0

neutral 12 24.0 24.0 58.0

true 16 32.0 32.0 90.0

very true 5 10.0 10.0 100.0

Total 50 100.0 100.0

Valid not at all true 3 6.0 6.0 6.0

not true 12 24.0 24.0 30.0