Financial Literacy the Need of the Hour
Mrs. Shilpa Buche*
Future Tower
Amanora Park Town, Pune 411028
98233 82525
[email protected] Dr. Sanjaykumar Gaikwad
79721 59656
[email protected] Abstract
Financial Literacy is understanding and knowing in detail about various aspects of
finances such as Saving, Spending, Tax Planning, Insurance, Planning for
Retirement, knowing about Time Value of Money, Interest Calculations, Risk, Returns
and Debt Management. Etc. In this paper the Researcher has done Research on 50
Aided Non-Professional College Teachers in Pune City to understand their Financial
Literacy. The researcher had considered Advance Level Literacy Questions on which
the researcher randomly selected Colleges. The Researcher personally visited the
Colleges and Interviewed the College Teachers with the Questionnaire. The
Questions are the Standard Advanced Level Questions. The researcher has
deliberately omitted the Basic Level Questions for this research. The questions were
based on different aspects like knowledge of Sock Market, Mutual Fund, bonds, Risk,
Return, Fluctuations in Market, Interest rates. Etc The Researcher asked total 8
Advanced Level Questions from which only 3 questions were answered correctly by
maximum Teachers. From this the researcher can conclude that 62% of questions are
wrongly answered by the College Teachers. It means that more than half of them are
not aware with Financial aspects of Investments. So, the researcher suggests that
there is a need of Financial Education Training Sessions to the College Teachers.
Key Words: Financial Literacy, Financial Planning, College Teachers.
Introduction
“Financial literacy is a combination of awareness, knowledge, skill, attitude and
behaviour necessary to make sound financial decisions and ultimately achieve
financial wellbeing.” – Atkinson and Messy, 20121
Financial Literacy is possessing knowledge of Finance to achieve personal financial
goals. Financial Literacy means knowing in detail about different Investment Avenues
and also Investing money in such a way that you achieve financial stability. It also
means that a person knows everything as to how he should use the money, that means
how he should spend, save for future, manage his debts, save for his children’s
education and marriage, save for vacations, save for his medicines, save for his
insurance and so on. While doing this he should also be aware with all sorts of
Financial terms like (time value of money, Inflation, Compound Interest, Risk and
Return, Diversification) and also know where to Invest the money to get more returns.
The person should also be aware with different financial products which are available
in the market.
Financial Literacy is divided into three components:
1)Financial Attitude.
2)Financial Behaviour.
3)Financial Knowledge.
1
https://www.ncfe.org.in/images/pdfs/nasional-surveyy/NISM_Final%20Report%20-%20West
%20Zone.pdf
1) Financial attitude means nothing but how is the attitude of a person towards
money that is how the person would earn, spend and save the money.
2) Financial Behaviour means how are the habbits about money that is how is the
money managed in day to day life.
3) Financial Knowledge means knowing in detail about all financial products,
terms of finance related to savings.
Objectives:
1. To know about Financial Literacy.
2. To study the Financial Literacy of College Teachers.
3. To know the level of Financial Literacy among them.
Scope of the Study:
The Researcher has surveyed 50 College Teachers from Aided Non-Professional
Courses and has tried to understand as to the financial literacy of College Teachers.
This study will let us know the Financial Literacy of the College Teachers.
Limitation of the Study:
The conclusions in this paper are based on the answers given by the College Teachers.
RESEARCH METHODOLOGY
Research Design: Descriptive Research.
Data Source: Primary and Secondary data.
Analysis of Data: Analysis of data is based on Questionnaire.
Sample Design: Random Sampling.
Universe: College Teachers of Non-Professional Colleges in Pune City.
Sampling Unit: Sample unit is College Teachers of Aided Colleges in Rural and
Urban areas of Pune city.
Sampling Size: 50 College Teachers of Aided Colleges in Rural and Urban area in
Pune City.
Literature Review
Sonia Marcolin and Anne Abrahim (2006), this paper has conducted its studies in
Australia, The United States and United Kingdom. During this period the need of
financial literacy became significant due to deregulation of financial markets. The
researcher has gone through 3 surveys in Australia and has come to conclusion that
there is lack of financial skills and knowledge with certain demographic
characteristics and can say that financial literacy in Australia is poor.
David L. Remund (2010) this research study focuses upon definitions of financial
literacy in United States. In this paper the researcher has gone through one hundred
resources including academic and professional journal articles, government and
industry resources materials, association websites and other research and program
materials.
Sandra J. Huston (2010) This paper studied different papers to know the Instrument
to measure Financial Literacy level of an individual. In this paper the researcher has
gone through 71individual studies but only 52 were identified for analysis, as the
remaining study focused on personal finance, financial knowledge, financial
education and was closely related to measurement construct, so the remaining 19
studies were not included in this paper. The researcher found out that creation of
financial education program to enhance financial literacy would be one of the
solutions which will increase financial literacy.
Annamaria Lusardi and Olivia S. Mitchel (2011) This paper studied the financial
Literacy level in eight countries like Germany, Netherlands, Sweden, Japan, Italy,
New Zealand, United States and Russia for older population. In this Research paper
the researcher designed three simple questions which focused on understanding the
financial literacy level on the basis of 3 economic concepts such as 1) Interest
Compounding 2) Inflation and 3) Risk Diversification. The Research paper interprets
that financial literacy is very low around the world, irrespective of the level of
financial market development and the type of pension provided.
Sobhesh Kumar Agarwalla, Samir K. Barua, Joshy Jacob and Jayant R. Verma,
(2013) in this paper the researcher studies the influence of various socio-demographic
factors on different dimensions of financial literacy among the working young in
urban India. Factors such as gender, education and income have influence on financial
literacy but few factors specific to India, such as joint-family and consultative
decision-making process are also found to significantly influence financial literacy.
Puneet Bhushan and Yajulu Medury (2013) here in this paper have studied the
financial literacy level of salaried individual of three districts in Himachal Pradesh
namely Shimla, Solan and Kangra. The researcher concludes that financial literacy
level is low in our country and necessary measures should be taken to increase
awareness about finance related matters.
Data Analysis on Financial Literacy of College Teachers
Table No 1: The Statement which describes the main function of Stock Market
Sr Statement Frequency Percentage
No (%)
1 The Stock Market helps to predict 2 4
stock earnings.
2 The Stock Market results in an 2 4
increase in the prices of Stocks
3 The Stock Market brings people 21 42
who want to buy stocks together
with those who want to sell stocks
4 Do not Know 25 50
Graph No 1: The Statement which describes the main function of Stock Market
The Statement which describes the main
function of Stock Market
Stay the
same
Decrease
Increase
0 10 20 30 40 50 60 70
Percentage (%) Frequency
Analysis and Interpretation of Data:
In this above data out of 50 respondents 25 were unaware about function of stock
market and 21 were able to answer it correctly. So, we can say that 50 % of the
College Teachers are unable to answer the question and 42% could answer it correctly
and rest answered it wrong.
Table No 2: Which Statement is correct for Mutual Funds?
Sr Statement Frequency Percentage
No (%)
1 Once one invests in a mutual 4 8
fund, one cannot withdraw the
money in the first year.
2 Mutual funds can invest in 22 44
several assets, for example
invest in both stocks and
bonds.
3 Mutual funds pay a guaranteed 5 10
rate of return which depends on
their past performance.
4 Do not know 19 38
Graph No 2: Which Statement is correct for Mutual Funds?
Statement on Mutual Funds
Stay the
same
Decrease
Increase
0 10 20 30 40 50 60 70
Percentage (%) Frequency
Analysis and Interpretation of Data
From the above analysis of 50 respondents we can say that 22 were able to answer the
question correctly and 19 were totally unaware about the answer and rest answered it
wrong. That means 44 % of College Teachers answered the question correctly.
Table No 3: Interest Rate rises than what happens to Bond prices
Sr Statement Frequency Percentage
No (%)
1 Rise 4 8
2 Fall 9 18
3 Stay the same 7 14
4 None of the above 1 2
5 Do not Know 29 58
Graph No 3: Interest Rate rises than what happens to Bond prices
Interest Rates and Bond Prices
Stay the
same
Decrease
Increase
0 10 20 30 40 50 60 70
Percentage (%) Frequency
Analysis and Interpretation of Data
In the above analysis the researcher can interpret that out of 50 respondents only 4
gave the correct answer that means only 8% gave the correct answer, 29 were not
aware that is 58 % were not aware of this answer. So, the researcher can conclude
here that the Colleges teachers are not aware about interest rates and its effects on
bond prices.
Table No 4: Company Stock or Mutual Fund which gives safer return
Sr Statement Frequency Percentage
No (%)
1 True 5 10
2 False 17 34
3 Do not Know 28 56
Graph No: Company Stock or Mutual Fund which gives safer return
Company Stock or Mutual Fund
Stay the
same
Decrease
Increase
0 10 20 30 40 50 60 70
Percentage (%) Frequency
Analysis and Interpretation of Data
From the above table and chart the researcher can conclude that 28 respondents were
not aware as to whether Stocks gives safer return or Mutual Fund, that means 56%
couldn’t answer this question. 17 of them gave correct answer that means 34% gave
the answer correctly. From this the researcher can say that the College Teachers are
not aware about the difference between Stock Market and Mutual Fund.
Table No 5: Stocks are Riskier than Bonds
Sr Statement Frequency Percentage
No (%)
1 True 20 40
2 False 2 4
3 Do not Know 28 56
Graph No 5: Stocks are Riskier than Bonds
Stocks are Riskier than Bonds
Stay the
same
Decrease
Increase
0 10 20 30 40 50 60 70
Percentage (%) Frequency
Analysis and Interpretation of Data
From the above table and graph we can conclude that 28 respondents are not aware as
to whether stock is riskier or bonds that means 56% are not aware about this. 20
respondents gave correct answer which is 40%.
Table No 6: Assets with highest return
Sr Statement Frequency Percentage
No (%)
1 Savings Account 3 6
2 Stocks 10 20
3 Mutual Fund 24 48
4 Do not Know 13 26
Graph No 6: Assets with highest return
Assests with highest return
Do not Know
Mutual Fund
Stocks
Savings Account
0 10 20 30 40 50 60
Percentage (%) Frequency
Analysis and Intrepretation of Data
In the above analysis 24 respondents gave wrong answer which is 48%, 13
respondents are not aware about the answer that is 26% only 10 respondents gave
correct answer as to Stocks give highest return which is 20 %.
Table No 7: Assests with highest Fluctuations
Sr Statement Frequency Percentage
No (%)
1 Savings Account 1 2
2 Bonds 2 4
3 Stocks 29 58
4 Mutual Funds 5 10
5 Do not Know 13 26
Graph No 7: Assests with highest Fluctuations
Assets with highest Fluctuations
Do not
Know
Stay the
same
Decrease
Increase
0 10 20 30 40 50 60 70
Percentage (%) Frequency
`
Analysis and Interpretation of Data
In this analysis the respondents have given the correct answer as to Stocks are highest
fluctuating assests that is 29 respondents means 58% gave correct answer 13 of them
were not aware and rest gave wrong answer.
Table No 8: Spreading Money in Different Assests and Risk of Losing money
Sr Statement Frequency Percentage
No (%)
1 Increase 5 10
2 Decrease 31 62
3 Stay the same 13 26
4 Do not Know 1 2
Graph No 8: Spreading Money in Different Assests and Risk of Losing money
Spreading money in different assests and
risk in losing of money
Do not
Know
Increase
0 10 20 30 40 50 60 70
Percentage (%) Frequency
Analysis and Interpretation of Data
The above data reveals that 31 respondents means 62 % gave correct answer as to
spreading money in different assests decreases the risk of losing money. 13
respondents said that the risk remains the same which was incorrect. And rest gave
the wrong answer.
Conclusion:
From the above research the researcher can conclude that out of 8 Questions only 3
Questions were answered correctly by the College Teachers that means only 38 %
College Teachers are Financial Literate and rest 62 % are not , So the researcher
suggest the there is a need to conduct Financial Education and training Sessions to the
College Teachers.
References:
1)Sonia Marcolin and Anne Abrahim (2006), Financial Literacy Research: current
literature and future opportunities, Available at http://ro.uow.edu.au/commpapers/223
2)David L. Remund (2010), Financial Literacy Explicated: The case for a clearer
definition in an increasingly complex economy, The Journal of Consumer Affairs,
Vol.44, No.2 2010
3) Sandra J Huston ( 2010 ) Measuring Financial Literacy, The Journal of Consumer
Affairs, Vo 44, No 2
4)Annamaria Lusardi and Olivia S. Mitchel (2011) Financial Literacy Around The World:
An Overview , Available at: http://www.nber.org/papers/w17107
5)Sobhesh Kumar Agarwalla, Samir K. Barua, Joshy Jacob and Jayant R.
Verma, (2013),
Financial Literacy among Working Young in Urban India, Available at:
www.iimahd.ernet.in/~jrvarma/papers/2013-10-02-literacy-working-young.pdf
6)Puneet Bhushan and Yajulu Medury ( 2013 ), Financial Literacy and its
Determinants, International Journal of Engineering, Business and Enterprise
Applications (IJEBEA), ISSN:2279-0039,4(2), March- May 2013, pg no 155 – 160,
Available at: http://iasir.net/IJEBEApapers/IJEBEA13-145.pdf
Websites
(1) https://www.ncfe.org.in/images/pdfs/nasional-surveyy/NISM_Final%20Report%20-
%20West%20Zone.pdf
(2) https://jgateplus.com
(3) http://www.nber.org/papers/w17107
(4)https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1728831,
