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7 Important Benefits of Financial Planning in India
Today, financial literacy is a major challenge in India. Studies have shown that 76% of Indian adults do not understand basic financial planning concepts and they are not even working towards enhancement of their financial literacy.
This is a user generated content for MyStory, a YourStory initiative to enable its community to contribute and have their voices heard. The views and writings here reflect that of the author and not of YourStory.
Financial planning helps you determine your short and long-term financial goals and create a balanced plan to meet those goals.
Today, financial literacy is a major challenge in India. Studies have shown that 76% of Indian adults do not understand basic financial planning concepts and they are not even working towards enhancement of their financial literacy.
Looking at the need for financial planning in India, the concept of improving financial literacy as a national project has been gradually building.
A large number of stakeholders including the central and state governments, financial institutions, financial regulations, civil society, educationists are all involved in spreading financial literacy. Besides these stakeholders, Power to me is also contributing a bit towards the upliftment of financial education in India.
We have designed a detailed and structured Financial Literacy programme which will empower you with the right information needed to plan your finances well.
The formulation and implementation of financial education in India will help in empowering the individuals through proper management of one’s finance. As a nationwide strategy financial education can be attributed to the following reasons -
- Knowledge and Skill
- Freedom from Exploitation
- Avoidance of over-Indebtedness
- Promoting Entrepreneurship
- Positive Spillover effects
- Shifting of Pension Responsibilities from State/ Corporations to Individuals
- Deeper Participation in Financial Markets
Knowledge and Skill
Today, an increase in the range and complexity of financial products has made it difficult for an individual to take an informed decision. Financial education is essential because it develops knowledge, skills and confidence to utilize financial products and services. It helps you to plan your present well and at the same time, it enables you to control your future circumstances effectively.
Freedom from Exploitation
Financial literacy will make you aware of your rights, plans, and benefits associated with financial management. It will provide you with the right knowledge, and at the same time protect you from tempting but fraudulent get-rich-quick schemes and the exorbitant interest rate charged by moneylenders.
Avoidance of over-Indebtedness
Financial education will help you understand the consequences of over-indebtedness and the strategies to avoid it. Financial literacy will also improve the quality of services and lead you toward making a wise financial decision.
Promoting Entrepreneurship
New techniques, policies, and planning in financial education empower small entrepreneurs. Small entrepreneurs are educated, they are already in the business and are often looking for opportunities to grow.
Financial education benefits entrepreneurs by expanding awareness about new financial products and at the same time, it also helps them to understand the dynamics of market mechanism and improve their business dealings.
Positive Spillover effects
Financial education can lead to multiplier effects in the economy. A financially aware household would resort to regular savings, which, in turn, would lead to investment in right channels and income generation. The financial well being of individuals will, in turn, increase the welfare of the society.
Shifting of Pension Responsibilities from State/ Corporations to Individuals
A financially educated person would be more aware of the benefits of financial management and planning. Such persons would be in a better position to assess their requirements and make savings in appropriate schemes for future goals. If every individual in India is financially literate. It will reduce the strain on social programs and pension plans, also it will foster an economy that is more resilient.
Deeper Participation in Financial Markets
In India, it’s essential for us to convert savers into investors. Since the percentage of financial literacy in India is very low, the number of individuals investing in financial markets is also low. We need the participation of domestic retail investors in securities market to give dividends by increasing the depth of the securities market, for reducing the dependence on foreign investors. This will allow domestic savers to reap the benefits of corporate growth and will also reduce the strain on Government Treasury for investment in National Infrastructure. All this can only be achieved if our population is sound in principles of financial literacy.
