RBI’s Annual Financial Literacy Week To Promote The Idea Of Becoming Financially Smart

Financial literacy is an important topic in the present times, it is as important for people to be financially literate as getting a degree. Even though financial literacy is gradually increasing data shows that only less than one-third of the Indian population is financially literate. The Reserve Bank of India (RBI) is promoting financial literacy among young adults through its annual Financial Literacy Week (FLW) campaign from February 26 to March 1, 2024. This year’s theme is, “Make a Right Start: Become Financially Smart”. The Financial Literacy Week has three special messages – the power of saving and compounding, banking needs for students and digital and cyber hygiene. The emphasis is on “Banking Essentials for Students” and “Digital and Cyber Hygiene” align with the overall strategic objectives of the National Strategy for Financial Education 2020-2025. This year's theme is targeted at young adults, primarily students. It aims to raise awareness about the benefits of developing discipline from an early age. RBI has instructed all the banks operating in the country to organize as many financial literacy programs on this theme as possible for various groups of society like school children, small entrepreneurs, farmers, self-help groups, senior citizens, etc.

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Banks have been advised to disseminate information and create awareness among the public during the week on the above subject by displaying posters developed by RBI on their websites, ATMs, mobile applications and digital display boards deployed in their branches. Digitization is playing a major role in spreading Financial Literacy in India. On the role of digital mediums and smartphones in enhancing financial literacy in India, Krishan Mishra, CEO of the Financial Planning Standards Board (FPSB India) said, “Digital media and smartphones are playing an important role in improving financial literacy in India. These platforms allow people to easily access financial education and resources. For example, mobile banking apps allow users to manage their finances, track expenses, and make informed decisions about saving and investing.

Additionally, online courses and videos on financial literacy are widely available, allowing individuals to learn on their own. Similarly, social media platforms are also a place for financial discussion and information sharing. The rise of digital payments and fintech solutions has made it easier for people to participate in financial activities by introducing new financial tools and services to the market. Overall, digital media and smartphones have unleashed financial education and made it accessible to a wider audience in India.”

Talking to Outlook Money about the importance of having a right start for financial planning Krishan Mishra said, “A right start in financial planning is important for a multitude of reasons. It helps establish a sound foundation to achieve financial goals, nurtures the power of compounding, mitigates risks through emergency funds, and helps cultivate good financial habits for life.”

When asked about the right time to start it, Mishra said, “Ideally, the right time to start Financial Planning is from one's first paycheck, adhering to the 50-30-20 rule for planning one's finances. This rule allocates 50% of income to needs such as rent, groceries, bills, etc.; 30% to wants such as dining out, entertainment, shopping, etc. and, 20% to savings for emergencies, investments, or one's financial goals. This approach simplifies budgeting for all age groups and also ensures a balanced financial outlook while planning. It instills financial discipline, and with the benefits of compounding encourages early wealth accumulation. Hence, a right start in financial planning sets the very foundation for a stable and prosperous financial journey for a bright financial future.”

Furthermore, as part of the campaign, RBI has announced a Financial Literacy Ideathon, which aims to invite innovative ideas from postgraduate students on creative strategies to propagate financial literacy among the youth and to empower them to engage in responsible activities, behave judiciously and make financial decisions wisely.