Explained: Importance of Financial Literacy After the Covid-19 Pandemic
With the looming third wave of Covid-19 looming, India could face new challenges, unimaginable until a year ago. For something that started out as a new health threat, the novel coronavirus pandemic has turned into a larger crisis, affecting not only our physical and mental well-being, but our financial health as well.
The most vulnerable were hit first and hardest and many marginalized communities still suffer the consequences. Even as the government is working on economic recovery, it cannot be ignored that the country’s lack of adequate financial knowledge has also contributed significantly to this problem.
And with so many Indians facing unprecedented financial challenges, we can never get over the crisis if we don’t make financial literacy a priority now.
IMPORTANCE OF FINANCIAL LITERACY
Contrary to popular belief, each of us, regardless of age, gender, caste, community, level of education, or whether we live in subways, towns, urban areas, small towns or rural villages, must know how to effectively manage our money. While financial literacy can change the lives of the most vulnerable in our society, for most others, it can help close the wealth gap and facilitate economic mobility.
Explained: How the Covid-19 Crisis Exposed India’s Growing Wealth Gap
Unfortunately, many Indians live from paycheck to paycheck, without sound financial planning to ensure a decently comfortable future. The worst part is that high interest rate debt in the form of credit cards, home and personal loans, etc. further restrict their ambitions to sound financial goals.
And that is why it is crucial and essential for every family not only to be financially literate, but also to have at least one financial guardian. So, they can not only manage their home, but also budget their expenses, manage their debts, choose the right investment options, save for their future and that of their family, and also prepare for the rainy days.
As the oft-repeated saying that ‘every cloud has a silver lining’, one positive aspect of the Covid-19 pandemic is that it made us realize how necessary and critical it is for us to effectively manage our money, more for our family.
HOW BUSINESS CAN HELP
Considering that a large part of our population is employed, employers must take the initiative to improve the financial literacy of their employees.
In several organizations around the world, human resources are working in tandem with the finance department to assist their staff in this regard after seeing that financial stress among employees, made worse by Covid-19, is impacting productivity, resulting in unexpected absences, substandard work. performance and increased distraction at work.
Interestingly, the launch of Digital India in 2015 triggered the need for financial literacy in the country and also made it more relevant to our businesses.
Like the Kirana neighborhood stores, which previously only handled cash, now accept digital payments for a considerable number of transactions. So much so that, unlike the days when they made sure their account had sufficient balance for their loan IMEs, many Kirana store owners pay their loan IMEs digitally, with the click of their button. smartphones using mobile applications.
GOING DIGITAL REQUIRES FINANCIAL AWARENESS
With the proliferation of online lenders, payment apps, e-wallets, and other digital tools, data protection and customer service have become increasingly important. Many consumers have little knowledge or understanding of how these businesses or applications work and the implications of their interaction with them.
As regulatory guidelines continue to evolve in the interest of customer protection, this new dimension adds to the awareness gap that exists among the common population. On the one hand, fintechs usually go a long way in bridging the gap in access to finance, on the other hand, it is incumbent on these companies not only to build trust through unambiguous disclosures, but also by properly educating users about the risks and potential pitfalls.
In addition, this essential message of financial literacy has not been sufficiently disseminated in rural areas. This is why those who live in villages and small towns have suffered from a lack of required financial awareness.
In summary, financial literacy should be a central pillar in the new post-Covid world. As India emerges from this crisis, we will realize that financial literacy is the foundation that will help our vast population, especially the vulnerable and marginalized people who have suffered the most, to make decisions that will make it easier to build. and the consolidation of a future healthy and secure environment.
(This article was written by Namrata Sehgal – Responsible for social performance management at Sub-K. The opinions expressed are personal)