FINANCIAL

LITERACY
Made by :- Sonakshi Bansal
Vanshika Jain
FINANCIAL
LITERACY
Financial literacy is the ability to understand and effectively
use various financial skills, including personal , financial
management, budgeting, and investing. It refers to a variety of

important financial skills and concepts. Financial literacy can

be obtained through reading books, listening to podcasts,
subscribing to financial content, or talking to a financial
professional.
 NEED OF FINANCIAL
LITERACY
Given the importance of finance in modern society, lacking
financial literacy can be very damaging to an individual’s
long-term financial success. Being financially illiterate can
lead to a number of pitfalls, such as being more likely to
accumulate unsustainable debt burdens, either through poor
spending decisions or a lack of long-term preparation. This,
in turn, can lead to poor credit, bankruptcy, housing
foreclosure, and other negative consequences. Moreover,
people tend to save their money for their needs and wants,
future needs, emergencies and for immediate large expenses.
FINANCIAL LITERACY :
THE NEED OF THE HOUR
Financial literacy can cover short-term financial strategy as well as
long-term financial strategy. It encompasses knowing how
investment decisions made today will impact your tax liabilities in
the future.
It is the need of the hour to financial literate the teenagers. They
should be aware of managing expenses, system of banks,
importance of savings and the changes in financial measures done
till now.
This way they will be able to protect themselves from debt trap and
frauds. Moreover, they should be aware of budgeting, RBI and
digital banking.
MANAGING
ALLOWANCE
Managing allowances are the first step in financial literacy activities
for students. It includes understanding one’s expenditures and
creating spending plans.

The students can follow the 40 -30-20-10 rule.

It recommends that 40% of your income goes towards your savings.

30% of your income goes towards necessary expenses (food, rent,
bills, etc.). 20% of your income goes towards discretionary spending
(entertainment, travel, etc.). 10% of your income goes towards
contributory activities (donations, charity, tithe, etc.).
 COMPARISON SHOPPING
• It refers to the act of evaluating prices, features, standards, and other characteristics of a product to
those of its competitor brands before purchasing it. Comparison shopping entails researching a product
and comparing it to several rival products on both an online and offline platform in order to get the
most value from a product at the lowest feasible price.
• Therefore, we can say that comparison shopping is a practice among consumers where a range of
available suppliers are compared to identify the best price for the items or services they are willing to
buy. It is an evaluation of potential sellers to see which one is offering the best deal.

• consumers can identify the best deals and find products at the lowest prices. Prices can vary
significantly between different sellers, and comparison shopping ensures that you don't overspend on a
product that is available at a lower price elsewhere.
BUDGETING
A budget is an estimated amount of income and
expenses for a given amount of time.
Budgeting provides a systematic way of reviewing
estimated with actual results, coordinating future
activities and setting realistic targets. It is an effective
management tool.
The first step to budgeting is identifying your fixed and
variable expenses.
This gives a clear picture of one’s expenses and helps in
further planning. We can practice the 50/20/30 rule
here.
 8

NEED V/S WANTS

Let us understand this concept with some real life situations.
When you feel hungry, you need food to satisfy your hunger.
Therefore, food is your need.

However, when you visit the market with your father and you
feel tempted to have ice cream. In this situation, ice cream is not
your ‘need.’ However, it is your ‘want.’

‘Needs’ are the essential requirements in our life such as food,

clothes and house. On the other hand, ‘Wants’ are for the things
you require to enhance the quality of your life, such as games,
music and TVs.
 DELAYED GRATIFICATION
DELAYED GRATIFICATION IS THE ABILITY TO RESIST THE TEMPTATION OF
IMMEDIATE REWARDS IN FAVOR OF ACHIEVING MORE VALUABLE AND SIGNIFICANT
REWARDS IN THE FUTURE.
IT INVOLVES TRADING SHORT-TERM PLEASURE FOR LONG-TERM GAIN. THIS
CONCEPT CAN BE INCREDIBLY HELPFUL WHEN IT COMES TO PERSONAL FINANCE.
PRACTICING DELAYED GRATIFICATION CAN HELP YOU BUILD STRONG FINANCIAL
HABITS AND SET YOURSELF UP FOR FINANCIAL SUCCESS IN THE FUTURE.
 FINANCIAL LITERACY
TOOLS : NEFT
• National Electronic Funds Transfer (NEFT) is a nation-wide centralised
payment system owned and operated by the Reserve Bank of India (RBI).

• The payment mode enables companies and individuals to transfer funds

electronically to other companies and individuals.
• The account holder needs to register the beneficiary account details such as
account holder name, account type (savings etc.), account number and
Indian Financial System Code (IFSC) which helps to identify individual
bank branches.
RTGS
RTGS is a real-time settlement system which allows for fast
processing of money transfer between any two accounts.

‘Real Time’ means the processing of instructions at the time

they are received; ‘Gross Settlement’ means that the settlement
of funds transfer instructions occurs individually.

The payments made via RTGS are final and irrevocable. The
RTGS system is primarily meant for large value transactions
CONCLUSION
Financial literacy is a crucial life skill to possess, it
boosts your financial capability.
Savings, budgeting, and financial planning should
be taught to students from the start of their
academic careers.
But learning about it is never too late. By
comprehending its elements, one can develop
financial literacy.
It is never too late to start investing, even after
turning 50. But getting a head start has its
advantages.
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