4 reasons why financial literacy among students is important | Explained

Financial literacy can help students avoid risky pitfalls and look forward to a secure future by making informed and wise decisions.

Students learn important life lessons right from childhood and thus, it becomes important to inculcate essential sessions in their academics for a brighter tomorrow.

Students may not be aware of the risks involved in lending or in high-interest loans but with proper guidance, they can be prepared to make informed financial decisions.(Unsplash)

One such essential lesson for educators is to introduce them to various topics on financial awareness and make them well-prepared concerning various financial concepts. One might ask if it is too early for students to be introduced to such concepts, but as time passes by we need to understand that the sooner students are made literate about financial topics, the better it is for their future.

In 2021, the National Payments Corporation of India (NPCI) and the Central Board of Secondary Education (CBSE) collaborated to introduce a financial literacy curriculum for students of Class VI. As a part of the collaboration, Financial Literacy Textbook was launched, aiming to enable students to have an understanding of basic financial concepts at a preliminary stage of their education.

“ I am happy to take financial literacy sessions to my students as they get exposed to learn the basic financial concepts and transactions at an early age. These sessions enable students to understand the impact of their financial decisions on their overall financial health, enabling them to make better-informed decisions,” says Bindu SJ, a teacher from Hyderabad.

Here are some reasons why financial literacy is important for students:

Cultivating healthy financial habits early in their life

Every individual needs to have good money management skills in life and through financial literacy we can teach students more about saving, budgeting their finances and also about spending their money wisely. Such lessons will help them save money for a secure future rather than wasting money and making poor financial decisions in their life.

Encouraging them to save and invest

It is always a good thought to spend wisely and to save for a rainy day later. Kids are not always aware of the importance of saving and by teaching them the importance of doing so to be prepared for emergencies or to achieve their long-term goals like embarking on their higher education, etc, it would be of great help to start their future securely.

" Students are taught the financial concepts and they acquire the knowledge of basic financial transactions carried out at a Bank(online and offline mode), understand the usage of debit and credit cards, importance of Aadhar card. They are also empowered with the basic knowledge of investments (Fixed deposits, recurring deposits, etc) during such sessions,” says Bindu.

Making them aware of financial risks

Students may not be aware of the risks involved in lending or in high-interest loans but with proper guidance, they can be prepared to make informed financial decisions. This can help them avoid risky pitfalls and look forward to a secure future.

Making way for budding entrepreneurs

Students who aspire to be entrepreneurs in the future ought to understand the importance of such financial concepts. The sooner they are introduced to topics like banking, savings, investments, etc, the better they can plan their career roadmap.