Financial Literacy

Financial literacy is essential for both men and women, but studies have shown that women are disproportionately more likely to have less financial knowledge. Low financial literacy is a problem throughout India, with a financial literacy rate of only 27%. However, this figure is even worse for women: a mere 21% of Indian women are adequately financially literate. This has significant deleterious effects for women’s financial independence and empowerment.

But what really is financial literacy? Financial literacy refers to the ability to understand and effectively use financial skills, including personal financial management, budgeting, and investing, and a general ability to make informed decisions about money. The benefits of being financially literate are abundant. Financially literate women have a greater sense of financial independence and control, leading as well as higher confidence in managing personal finances. The prevalent lack of financial literacy among women in India oftentimes leads to their being completely financially dependent on their husbands or other family members, something that is exacerbated by the fact that most women in India do not work and hence do not earn an independent income. 

Additionally, financial literacy can help women to make more informed decisions about their long-term financial goals, such as retirement planning and investing. Furthermore, financial education can help women to navigate financial challenges, such as wage gaps, caregiving responsibilities, and unexpected expenses, more effectively. Studies have suggested that improved financial literacy of women would not only help women gain autonomy and agency but it would also boost the economy of the nation. Low financial literacy rates dramatically impact the lives of women, resulting in them having to work harder, take more time to pay debts, and often settle for earning less. Therefore, it is important for women to have the necessary financial knowledge and skills to make informed decisions about money and achieve financial stability.

The challenge in increasing women’s financial literacy is that the lack of financial literacy is systematically passed down. Due to the absence of financial literacy in the current educational system, whether an individual is financially literate is dependent on their family. As a result, women, and particularly poor women, are far less likely to learn about financial literacy. 

Steps to combat low financial literacy in India, particularly its gendered nature, include introducing financial literacy at schools across the country so that financial literacy can be inculcated from an early age as well as changing people’s mindsets so that they believe that women can and should be financially autonomous and play an equal role in the financial sphere of life.Combatting low financial literacy among women can have important effects both in terms of empowering women to be more independent and enabling their participation in the economy, hence adding to economic growth. Thus, the government and private actors like educational institutions must take steps to ensure that financial literacy is expanded in order to close the gap in financial literacy between men and women and permit women to be more financially independent.

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