We are living in an era where 18-year-olds can seamlessly access loans from various loan aggregators. This phenomenon raises an important question that resonates with our generation: "Is today's generation truly aware of the financial decisions they are making?" It's a question that deserves our attention and reflection.
While some might argue that the answer is a resounding "yes," given the influence of content creators discussing finance, the reality is often quite different. A recent article by YourStory delivers a sobering statistic: only 27% of India's youth are financially literate. This statistic is an eye-opener. It tells us that despite the easy access to financial information and services, a significant portion of our generation lacks the fundamental knowledge needed to navigate the complex financial landscape.
The reasons behind this financial illiteracy are many, and understanding these factors is the first step toward addressing this issue effectively. Here are some of the contributing factors:
Lack of Financial Education: In recent years, there has been a surge in the number of influencers discussing finance. They offer advice, share tips, and dissect complex financial concepts. While this information is valuable, the concern lies in how many people actually follow their guidance. Moreover, many individuals who consume this content are in the 20 to 25 age bracket and are just starting their careers. They may lack the real-life experiences needed to fully grasp the implications of their financial decisions.
Easy Access to Credit: The increase of Fintech apps and online lending platforms has made obtaining loans easier than ever before. Regardless of age and income level, individuals can access credit with minimal effort. According to an article by ET Now, Fintech companies disbursed nearly 18.3 million loans in the fourth quarter of 2023, compared to the 6 million loans provided by the rest of the financial ecosystem. The problem, however, is not obtaining loans but the ability to manage and repay them responsibly.
Lack of Financial Planning: With loans readily accessible, many young individuals find themselves burdened with debt they struggle to repay. This occurs for a variety of reasons. Some take out loans under peer pressure to buy luxury items while others borrow without a stable job, leading to financial instability and eventual debt accumulation. These challenges and the dire need for financial education are undeniable, but it's not all bleak. Many of the country's youth are actively displaying an interest in becoming financially literate. This is a promising sign, as informed financial decisions can significantly impact one's life and future.
The emergence of numerous financial influencers, who have successfully leveraged social media platforms to educate and engage audiences, has been a catalyst for change. These influencers simplify complex financial concepts and offer practical advice, making it easier for young people to comprehend and apply financial principles in their lives. Despite these positive developments, there is still ample room for improvement. So, what are the potential solutions to enhance financial literacy among our generation? Here are a few suggestions:
Introducing Financial Education in Schools: Imagine a subject called "Financial Education (FE)" being incorporated into school curriculum alongside traditional subjects like Maths, Science and Social Studies. This curriculum could cover a wide range of topics, from basic financial literacy to investment principles and understanding the nuances of various financial products and services. Not only would this excite students, but it would also empower them to make wiser financial choices from a young age.
Utilizing Resources Effectively: In today's digital age, there's a wealth of resources available for individuals interested in financial literacy. Platforms like Udemy,Unacademy and Youtube offer numerous courses covering various aspects of finance. These courses are accessible to anyone, regardless of their prior knowledge or experience. Many of these resources offer both paid and free courses. A simple online search for "How to be Financially Literate" yields a plethora of results and materials that can guide you toward a deeper understanding of financial concepts.
Open Discussions: Just as we enthusiastically discuss cricket matches with friends and family, it's equally important to cultivate a culture of discussing financial education. Talking about financial topics should not be taboo. Encouraging open conversations not only promotes healthy discussions within your social circles but also provides opportunities for the younger generation to learn from real-world experiences shared by others. Incorporating these practices can indeed foster financial literacy, but it ultimately depends on the dedication and effort put forth by individuals. The youth of our nation represents its future, and their financial health is integral to the nation's overall prosperity. Financial literacy is not just a personal advantage; it's a collective asset that empowers individuals to make informed decisions, secure their financial well-being, and contribute to the nation's economic growth and stability.
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