CHAPTER 1

INTRODUCTION

The growth and development of the Indian economy and the expansion of financial markets
through liberalization, privatization and globalization have given a way to a plethora of
financial products either as an investment alternative or a credit one. But, on the other hand,
financial illiteracy or low level of financial literacy prevents the individuals from making a
judicious choice regarding his/her financial decisions. As a result, the individuals are not able
to choose the most suitable investment alternative which can beat the rate of inflation
prevailing in the economy and give them a net positive return. Over the last decade, the
Indian economy has grown at a rapid pace. However, this growth has faced increased
pressure from both moderation in investment demand and an uncertain global environment. If
growth is sufficiently inclusive, it would certainly provide an environment conducive to bring
about a broad-based improvement in living standards. This improvement in living standards
would seek the distribution of higher quality and quantity of goods and services to the
individuals and to the society, thereby contributing to material well-being. Thus, for the
Indian economy, the growth would need to be accompanied with a broad based economic
development. The basic tenet of process of development‖ is given in the tenth five year plan,
which stated that the process of development in any society should ideally be viewed and
assessed in terms of what it does for the average individual. The decade of the 1990s saw a
visible shift in the focus of development planning from the mere expansion of the production
of goods and services and the consequent growth in per capita income to planning for
enhancement of human well-being. Later, it was realized that human development means
much more than the rise or fall of national income. about the quality of life, the level of
human well-being and the access to basic social service. Hence, it is to be noted that, to cope
up with the inflation and to navigate the financial markets, an individual must invest his/her
saving in a proper way. This plays a significant role in the ability of the individual to enjoy a
decent standard of living throughout his/her lifespan. Thus, ability to manage money and take
effective actions to plan the current and future use of money i.e., financial literacy is of
paramount importance in the achievement of the developmental goals of our economic
planning. Financial literacy has become increasingly important over the past decades. There
is a growing belief that the individual would need to become more self-reliant in the future.
Increased competition and more complex products in the financial services industry leave
many people ill- equipped to cope with the sophisticated choices they may need to make.
Compared to the previous generations, there is now a wide variety of ways individuals
generate and dispose their income. The changes in work life over the world are meant that the
income stream of individuals has become more inconsistent. The changing world of work has
made an inconsistent income over an extended period. There are periods of high income
followed by low level of income or no income at all. At the same time, people are living
longer, and they need to make a greater provision for retirement, health care and insurances to
cover unpredictable eventualities, where government/state is no longer able to provide the
type of safety net that was available in the past. Given all this, individuals must have
necessary skills to make suitable financial decisions to enable them to be more in control of
their own circumstances and have a secure financial future. Education can play a critical role
in equipping consumers with the fundamental knowledge required to choose among the
myriad of products and providers in the financial services industry. This is especially true for
populations that have traditionally been underserved by our financial system. In particular,
financial literacy education may help to prevent vulnerable sections of society from becoming
entangled in financially devastating credit arrangements. In India, policymakers have
recognized financial literacy as an essential life skill. Developing and promoting financial
literacy through financial education has become an important policy priority to complement
financial consumer protection, inclusion and prudential regulation. The national financial
education efforts vary according to set-up, audience and subject matter. Several organizations
jointly work to deliver financial education including regulatory authorities like Reserve Bank
of India, Ministry of Corporate Affairs, Ministry of Human Resource Development,
Securities and Exchange Board of India, Insurance Regulatory and Development Authority,
NABARD, Financial Stability and Development Council, policy makers like OECD,
educational institutions like National Institute for Securities Market and Indian School of
Microfinance for Women, self-regulatory organizations such as The National Stock Exchange
Ltd. and The Bombay Stock Exchange Limited, non-governmental organizations like
Sanchayan, SEWA, Meljol, CRY, City India and financial institutions such as ICICI Bank,
India Infoline Ltd., Bank of India, etc. The objectives of this initiative undertaken by these
organizations are to empower the people on the subject of personal finance by providing them
basic knowledge of planning their expenses against their incomes, inculcating the saving
habits so that they can live and enjoy dignified life after retirement.
Financial literacy is the cognitive understanding of financial components and skills such as
budgeting, investing, borrowing, taxation, and personal fiscal management. The absence of
such skills is referred to as being financially illiterate. According to the Financial Industry
Regulatory Authority (FINRA), about 66% of the American population is considered
financially illiterate.

Being financially literate allows an individual to be better prepared for specific financial
roadblocks, which, in turn, decreases the chances of personal economic distress.

Achieving financial literacy is crucial today society due to everyday facets of life, such as
student loans, mortgages, credit cards, investments, and health insurance. The ‘Organization
for Economic Co-operation and Development (OECD) has defined Financial Education as’
“The process by which financial investors/consumers improve their understanding of
financial products, concepts and risks, and through information, instruction and/or objective
advice, develop the skills and confidence to become more aware of financial risks and
opportunities, to make informed choices, to know where to go for help, and to take other
effective actions to improve their financial well-being”. The OECD, International Network on
Financial Education, INFE in the year, 2011 defined financial literacy as ‘as 'A combination
of awareness, knowledge, skill, attitude, and behavior necessary to make sound financial
decisions and ultimately achieve individual financial well-being.

Financial literacy historical background

In recent years the importance of Financial Literacy or Financial Education is becoming more
valuable due to the complexity of financial markets and lack of information to common
people, and this led to the loss in the financial market to the common people. Recognizing the
need for and importance of financial literacy and financial awareness, the governments of
various countries have started programs and schemes to strengthen the financial knowledge
among the citizens in their respective countries. If we talk about India, the SEBI, Securities
and Exchange Board of India which is the watchdog of the Indian stock market of the country
has started a lot of financial awareness programs with the help of schools, colleges, and
universities. Financial awareness has made a very drastic and propounding effect on how the
families spend and invest in the financial market leading to the more return and less risk &
loss to the investors. In the year 2008, an international program on financial literacy was
announced to be supported by the World Bank and Russian federation.

Financial Literacy and Awareness Initiatives in India:

RBI -Reserve Bank of India: In 2007 Reserve bank of India launched and started Financial
Literacy and Credit counselling Centers which offers free of cost financial education and
counselling as well to different populations of urban and rural areas of the country. Some
banks also started the initiative in different rural and urban areas and provide various
financial education and credit counselling services. The basic fundamental purpose of this
financial awareness and financial literacy drive by the RBI was to create an educated
ecosystem regarding the financial framework. The credit counselling centers are also called
knowledge centers which are helping the small businesses and farmers to start their own
enterprising units. The basic mission of these drives by the government agencies is to make
people aware and to help masses to easily transact in the financial markets by safeguarding
their profits and interests. The various branch offices of the RBI in the major cities like New
Delhi, Chennai, Mumbai have initiated lot of drives and efforts to initiate the financial
literacy drives among the masses Example:- Comic books like currency masters and Bank
masters are started by Chennai branch office of the RBI to increase the financial literacy drive
among the masses, The Hyderabad branch of the RBI launched many schemes and initiatives
like posters, brochures, presentations, computer games, video films to spread the financial
literacy among the masses like farmers, businesses, college students, women etc. RBI in the
year drafted and released a national strategy for financial awareness and education. In the
strategy financial education for schools and banks both were taken into consideration. Banks
are the pillars of the financial system and have a very important role in the financial
ecosystem of the country. The commercial banks have started different schemes and
programs to educate and create different products with the help of different counselling
centers and training institutes. These commercial banks help the public in creating awareness
and also help different backward and rural sections of the society to fulfil their obligations on
repayment of loans and problems related to banking services.

SEBI -Securities and Exchange Board of India: started different programs to make investors,
youths & students at different colleges and institutions aware of the importance of financial
awareness and literacy and also covers the basic knowledge of different products of stock
market. Apart from creating awareness on financial education SEBI also conducts various
tests on financial awareness at different schools. Workshops and seminars on financial
literacy are also a major part of the awareness programs conducted by SEBI in different
colleges and institutions. SEBI also conducts different campaigns in different areas of the
country such as rural and backward areas also with the help of different interested resource
persons in the area of financial literacy and education. The different programs and initiatives
done by SEBI is very helpful and useful for the different persons across the country.

The advantages of Financial Education by SEBI:

 Financial education helps in building a secure financial future.

 Financial Education helps to be ready for different financial risks.
 It also helps in buying different financial products.
 Effective in choosing different savings and investment patterns.
 Helps in creating awareness and achieving financial goals.

IRDA –Insurance Regulatory and Development Authority: IRDA has started different
programs on financial literacy and awareness. Awareness programs for different
policyholders and for common public was disseminated on television and radio as well to
cover masses and also with the help of different prints media such as newspapers etc. in
different languages all over the country. IRDA has also launched a website on financial
education for the common interest of the public to make people aware of different plans and
policies and to safeguard investor’s interest. IRDA had made different rules and guidelines
which should be followed by insurance companies and investors judiciously.

Financial Literacy and Awareness at Global level:

In the 1950's Financial literacy was growing and was becoming popular and it was the time
when different financial issues related to budgeting, income, savings, risks, retirement,
security was mainly the main objective of the various research comprising a total of more
than fifty percent. The Organization of Economic Cooperation and Development started a
project with the Government in the year 2003, the objective of this project was to develop
and improve financial literacy and education standards in different areas of different nations
through common practices and principles of financial education, awareness, and literacy. The
Organization of Economic Cooperation and Development started a comprehensive global
study to find financial literacy and awareness through different surveys and by developing
globally acceptable questionnaires. The study was published in the year 2005. The
Organization of Economic Cooperation and Development with the objective of research at
global level launched an International Gateway for Financial Education and literacy known as
the ‘clearing house in the field of financial education, programs, information and research
work worldwide.’ A partnership was announced in the year 2008, that the Russian Federation
and World Bank will work together to support financially different programs on financial
literacy, awareness and education through funding of $15 million in Financial Literacy and
education programs in Russia. The Organization of Economic Cooperation and Development
in the year 2013, with Russia’s G-20 Presidency drafted a report on how to advance National
Strategies on Financial Literacy and Education to improve the level of financial education
through different national strategies. The Department of Education United Kingdom
formulated compulsory financial education in almost all schools from September 2014.

OECD, Recommendation on Principles and Practices of Financial Education and Awareness

are:

 Unbiased and fair financial education should be promoted by the government and all
the respective stakeholders.
 To educate people as early as possible, financial education should be started at the
school level.
 To encourage accountability and responsibility, financial education must be a part of
good governance.
 The financial education must be distinguished from the commercial advice for the
staff of different financial institutions and a new code of conduct should be
developed.
 The different financial education programs must focus on the basic important aspects
of life planning and control like saving, Insurance, Pension etc.
 The target of such programs should be always specified and personalized.
 The persons who are going to retire in future should be made aware of different
schemes and programs.
 Different campaigns on National and state level, free information on financial
education, websites should be made public to promote financial education.

Fundamental Components of Financial Literacy

Financial literacy consists of several financial components and skills that allow an individual
to gain knowledge regarding the effective management of money and debt.
Below are the fundamental components of financial literacy that should be learned.

1. Budgeting

In budgeting, there are four main uses for money that determine a budget: spending,
investing, saving, and giving away.

Creating the right balance throughout the primary uses of money allows individuals to better
allocate their income, resulting in financial security and prosperity.

In general, a budget should be composed in a way that pays off all existing debt while leaving
money aside for saving and making beneficial investments.

2. Investing

To become financially literate, an individual must learn about key components regarding
investing. Some of the components that should be learned to ensure favorable investments are
interest rates, price levels, diversification, risk mitigation, and indexes.

Learning about crucial investment components allows individuals to make smarter financial
decisions that may result in an increased inflow of income.

3. Borrowing

In most cases, almost every individual is required to borrow money at one point in their life.
To ensure borrowing is done effectively, an understanding of interest rates, compound
interest, time value of money, payment periods, and loan structure is crucial.

If the criteria above are understood sufficiently, an individual’s financial literacy will
increase, which will provide practical borrowing guidelines and reduce long-term financial
stress.

4. Taxation

Gaining knowledge about the different forms of taxation and how they impact an individual’s
net income is crucial for obtaining financial literacy. Whether it be employment, investment,
rental, inheritance, or unexpected, each source of income is taxed differently.

Awareness of the different income tax rates permits economic stability and increases financial
performance through income management.

5. Personal Financial Management

The most important criteria, personal financial management, includes an entire mix of all of
the components listed above.

Financial security is ensured by balancing the mix of financial components above to solidify
and increase investments and savings while reducing borrowing and debt.

Achieving an in-depth knowledge of the financial components discussed above guarantees an

increase in an individual’s financial literacy.

Importance of Financial Literacy

The importance of financial literacy is realized when it is put in the perspective of the
following developments in the financial space:

Financial products and services innovation: Growing numbers of consumers are able to
access myriad of financial products and services provided by the variety of providers through
the various distribution channels. Deregulation and liberalization of financial markets, and
reduction of costs through financial engineering, developments in information and
telecommunication have brought many newer financial products and services tailored to meet
very specific market needs. These financial products and services innovations enabled the
consumers to gain access to greater variety of financial products and provide them more
choices to park their savings. The understanding of these innovations is crucial on the part of
consumers, as these innovations do not only provide more choices to consumers, but also
challenges to understand the benefits and costs associated with the innovations, and more
specific the risk-return matrix inherent to each innovation.

Changing scenario of the domestic financial markets: Many developing countries have
undertaken structural changes in their financial markets and made it more liberalized,
deregulated and open for retail consumers and foreign investors for more inflow of savings
and investments to boost the growth rate of economy. In India, the LPG policy along with the
deregulation of financial markets has played an important role to develop the domestic
financial market. Post 1991, many important sectors of financial services industry opened up
for private players to gain wider access to consumers. As a result, not only the giant domestic
non-financial services companies have made their entry, but also foreign companies entered
into Indian financial services industry with the introduction of newer financial products. To
compete successfully and to gain market share, these companies have started to provide
generalized and customised financial solutions and made it easier to obtain credit for
consumers of this country, who had limited prior experience with financial markets and
hence, due to lack of experience and knowledge about the working of financial markets and
its products, consumers possess low awareness about the financial products and services,
distrust the modern financial solutions and prefer traditional avenues for investing their
money. As a result, they are unable to derive optimum financial benefit of the opportunities
which these companies‘ financial products/services provide.

Multifaceted features of financial products: The increased complexity of financial products

and services has meant that it is annoying for an average person to be asked to take financial
decision. Perhaps the confusion has arisen not only because of the speed at which financial
markets and new financial instruments have emerged or more number of institutions
providing more complex financial products, but also because of the inability to understand
basic financial concepts. The financial services are divided mainly into two categories:
Saving/ investment services which can be viewed as the instruments for financing future
consumption based on current earnings and credit services i.e. loans/ liabilities which are the
instruments for financing current consumption based upon the future earnings. Latter, is
dependent on individual‘s financial needs (or objectives) and abilities (resources) to acquire
these financial assets and liabilities. The combination of financial need priorities and resource
availability at different stages of household‘s life cycle influences the sequence in which
financial services are acquired by the household. But, nowadays consumers are faced with
various financial instruments offering a wide range of benefits and options with respect to
fees, interest rates, length of contract, exposure to risk etc. The quality of some of these
financial products, such as pension, insurance policies etc. and their financial implications on
investors are difficult to understand, as they require long term investment horizon and often
they are purchased infrequently and there is often a significant lapse of time between the
investment made and the return earned. The understanding of multifaceted features of
financial products and services is quite difficult for the average individual which result into
greater perceived risk, need to search greater volume of information to make comparison
across a number of factors which in turn makes decision making more complex, and
subsequent delay in making investment decision.

Increase in an individual’s responsibility: Nuclear family structure requires an individual to

make number of financial decisions related to spending, saving, investments, credit etc. not
only for himself but also for his family. People also need to assume more responsibility for
funding personal or family healthcare needs. Moreover, increasing education costs make it
important for parents to plan and invest adequately for their children‘s education.

Increase in the life expectancy, changes in pension agreement and transfer of risk:
Increase in the life expectancy means the possibility of more time spent in retirement and
thus, a greater need of financial planning, expanded insurance, and provisions of health care
related expenses to cover unpredictable eventualities. A case in point is the shift from Defined
Benefit Plan to Defined Contribution Plan, known as New Pension Scheme (NPS). Since the
last decade, there has been a widespread transfer of risk from both governments and
employers to individuals. The governments started to reduce the state supported pensions,
and some are reducing healthcare benefits. Defined contribution pension plans are quickly
replacing defined benefit pension plans, shifting the responsibility onto workers to save for
their own financial security after retirement. Most surveys show that a majority of workers
are unaware of the risks they now have to face, and do not have sufficient knowledge and
skill to manage such risks adequately, even if they are aware of them (OECD, 2008). The
implementation of New Pension Scheme requires the workers to make various decisions
regarding contribution to plan. As governments will no longer enough to provide social
security, increasing responsibility has come on the shoulders of an individual. Thus,
individuals need to consider not only investment risk and return trade off, but also uncertainty
regarding their life expectancy, attitudes towards risk, current and future earning potential and
likely changes in the personal and social circumstances.

Technological changes and market innovations: Technology advances have transformed

every aspect of processing, marketing and delivery of financial products and services. The
expansion of internet as a mean for communicating and delivering financial services and/or
products has also enabled financial services providers to market the financial products and
serve the customers more effectively and efficiently. These communication and delivery
innovations increase the amount of information available to consumers enable them to select
the best from the myriad of products and services without geographic limitations. Benefit
from innovations, however, consumers must be financially knowledgeable and literate.

Consequences of financial illiteracy

As discussed above, to cope up with the financial products and services innovations,
changing scenario of the domestic financial markets, multifaceted features of financial
products, increase in an individual‘s responsibility, increase in the life expectancy, changes in
pension agreement and transfer of risk and technological changes and market innovations,
every individual needs to be financially literate. Chidambaram (200773) said that ―financial
literacy needs to be embedded in our way of life. Everyone who earns an income is a
potential saver; every saver is a potential investor; every investor ought to be financially
literate‖.Financial education is important not only for the investor or his/her family, but also
the community mass as well. Again, there is a difference between providing information and
providing education, where education may require collection of information, skill building
and motivation on the right time to make the desired changes in behaviour. Hilgert, Hogarth,
& Beverly (200395) also agree that financial knowledge appears to be directly correlated
with self-beneficial financial behaviour. Mandell (2009) states, Financial behaviour seems to
be positively affected by financial literacy, however the long-term financial education on
financial behavior are less certain‖.

Personal financial literacy prepares an individual to manage money, credit, and debt,
effectively. Better informed consumers make more effective choices and more appropriate
decisions. They are less likely to be mis-sold or mis-buy products and services. From a
broader perspective, market operations and competitive forces are compromised when
consumers do not have the skills to manage their finances effectively. As financially
knowledgeable consumers demand products that meet their short term and long term financial
needs. Hence, it helps to create a more competitive and more efficient financial market.
Looking to the recent scenario of Indian financial market, the Indians are having a high
propensity to save, but they choose to put their money in low-yielding instruments and one of
the factors responsible for this is lack of financial plan for future. Furthermore, misplaced
financial optimism‘ is a direct fallout of the lack of financial literacy among Indian
households.

Benefits of Financial Literacy

Being financially literate is a skill that brings forth an assortment of benefits that can improve
the standard of living for individuals through an increase in financial stability.

 Listed below are the assortment of benefits of being financially literate:

 Ability to make better financial decisions.
 Effective management of money and debt
 Greater equipped to reach financial goals.
 Reduction of expenses through better regulation
  Less financial stress and anxiety
 Increase in ethical decision-making when selecting insurance, loans, investments, and
using a credit card.
 Effective creation of a structured budget
 Making steps to becoming financially literate is an important component of life that
can ensure financial solidity, reduce anxiety, and stimulate the achievement of
financial goals.

Where to Gain Financial Literacy

Beyond gaining knowledge through word-of-mouth, there is an assortment of tools and

online modules that can increase an individual’s financial literacy.

Listed below are some tools an individual can use to increase financial literacy:

Econoline: Online financial lessons for K-12 students

Money Smart: Free financial tools such as podcasts, lesson plans, and games to increase
financial literacy.

Moneywise: In a partnership between Capital One and Consumer Action, moneywise

provides free multilingual financial education

In Charge: Dedicated to empowering consumers through personal financial management, In

Charge provides online eBooks for educational purposes.

Any of the options listed above provides beneficial financial knowledge that should be
pursued if an individual wishes to grow their financial literacy.

Objective

The objectives of a study on financial awareness and student behavior could be:

 Understanding financial knowledge:

Assess the level of financial literacy among students. This could involve knowledge of
budgeting, saving, debt management, credit cards, and basic financial products.

 Examining financial behavior:

Analyze how students manage their money. This might include spending habits, saving
patterns, use of credit, and debt accumulation.
 Identifying challenges and goals:

Explore the financial challenges students face, such as student loan burden, living expenses,
and limited income.

Understand students' financial goals, including saving for education, future purchases, or
retirement.

 Informing interventions:

Based on the findings, propose solutions to improve financial literacy and promote
responsible financial behavior among students. This could involve educational programs,
workshops, or policy recommendations.

Overall, the study aims to gain a comprehensive picture of students' financial situation and
develop strategies to empower them to make informed financial decisions for a secure future.

Literature review

Feizal et al. (2016) analysed the financial awareness of UiTM students of Kota studying in
undergraduate courses. Financial awareness was measured on three aspects including
financial concept, risk and issues. The study also analysed relationship between demographic
factors such as gender, specialization and hometown and financial awareness. Independent
statistics was used for analysis purpose and result of the study showed no relationship
between gender, financial awareness as well as hometown and financial awareness. The study
also concluded that students opting for finance and marketing have more awareness in
comparison to office management.

Jaini et al. (2015) the study investigated the level of awareness among young adults related
to financial products. The objective of study was to analyse the effect of demographic factors
including age gender and education level on financial awareness”. The sample size comprised
of 280 students studying in private higher education institutions situated in Subang Jaya,
Malaysia. Hypothesis testing was used for statistical purpose in multivariate analysis. The
study concluded that education level had high effect on awareness level also there was huge
gap between awareness level of male and female.
Garg & Singh (2017) this study analysed the influence of demographic factors including
level of income on level of financial literacy among different youths. This study also
examined the relationship between three factors ‘which are financial knowledge, attitude and
behaviour. The study concluded that there is low level of financial literacy’ among youths and
it was found that there is an interlink-age between financial awareness, attitude and behaviour
of youths.

Money Master Survey (2013) analysed the financial literacy of 200 school students and
youths of different universities of different countries such as Turkey, Portugal, Lithuania,
Austria and Spain. The survey was conducted on a particular group of students from their
transition phase i.e. from childhood to adulthood. The survey also checked the awareness
level on various financial products and financial services.

Pauri, & Mehra (2016) this study analysed numerous factors influencing the financial
attitude of women in India. To check the financial attitudes of women towards buying various
financial products were studied using cluster analysis. The study concluded that there are
several factors which are responsible for the formation of clusters like interest, financial
issues etc.

Rizwan, Sadhik & Kumar (2015) analysed and examined the financial literacy and personal
finance of 30 college students. The study emphasized on need of various financial
programmes in college campus and desirability of students in participating of these
programmes. The collection was done from primary and secondary methods and convenience
sampling was used for sample selection.

Paluri & Mehra (2016) analysed in his exploratory study segmentation of women on the
basis of distinct levels of financial attitudes in India. Distinct factors were identified which
influences Indian women’s financial attitude and classified based on these factors based on
attitudes. Nanda & Samanta (2018) attempted to understand different concepts related to
financial literacy and secondary data from various sources were used to find the results. The
main purpose of the study was to identify the variables which have an effect the financial
literacy of different tribes. After successful conduct of the study, it was found that the
different people of the tribe are excluded from various basic education systems, income
generating activities and from country’s political system. The standard of living of these tribal
people was low.
“Sivaramakrishnan, Srivastava & Rastogi (2017) explored effect of financial literacy on
the investment behaviour and patterns of investors in stock market. The study was based on
past two empirical study theory of planned behaviour which was used to analyse the stock
market participation of investors. The study was conducted in four cities of India and the
targeted sample was 506 retail investors. The results of the study showed that the level of
financial literacy has a positive and negative impact on the investment and behaviour patterns
of investors.

De Bassa Schreiber’s (2013) findings underscore the pivotal role of financial literacy in
shaping individuals' confidence and competence in managing their personal finances. Those
with higher levels of financial literacy exhibit greater confidence in making sound financial
decisions, leading to more favourable monetary outcomes. These individuals demonstrate a
propensity to utilize a diverse range of financial instruments, including both savings and
investment vehicles, in their financial decision-making processes. Moreover, they are more
inclined to leverage high-cost borrowing options judiciously.

Conversely, individuals with lower levels of financial literacy tend to exhibit more
conservative financial behaviours, often limiting their financial decisions to managing
outstanding debts and relying heavily on credit cards, even when more cost-effective
alternatives are available. This disparity in financial knowledge and decision-making prowess
underscores the importance of enhancing financial literacy levels among the populace.

Despite the evident benefits of improved financial literacy, studies have consistently revealed
widespread financial illiteracy among individuals worldwide, including in countries like
India. Addressing this challenge necessitates concerted efforts to implement initiatives aimed
at enhancing financial education and awareness. By empowering individuals with the
knowledge and skills needed to navigate the complexities of personal finance, society can
uplift standards of living and foster greater financial well-being for all.

Atkinson & Messy (2012), Brown & Graf (2013), and Lusardi & Mitchell (2011) have all
highlighted the critical importance of financial literacy as a fundamental component of
economic well-being and financial stability. Recognizing the need to enhance the financial
literacy levels among its populace, India has taken proactive steps towards this goal. The
Reserve Bank of India (RBI) has been at the forefront of this initiative, authorizing
commercial banks to implement measures aimed at widening financial inclusion. This is
achieved by promoting financial literacy across the country, ensuring that more individuals
have access to and understand financial services.

Facilitate a structured approach towards improving financial literacy, the RBI has overseen
the creation and release of a comprehensive blueprint for a national strategy on financial
education. This strategic document outlines a series of actions and objectives aimed at
bridging the gap in financial literacy among various demographics within the Indian
population.

Research has consistently shown that financial literacy levels vary significantly based on
demographic variables such as gender, age, income, and education. These disparities
underscore the need for targeted financial education programs that are sensitive to the unique
needs and circumstances of different groups within society. By addressing these differences,
the national strategy aims to ensure that all segments of the population, irrespective of their
demographic characteristics, have the opportunity to improve their financial literacy. This is
seen as a crucial step towards achieving broader financial inclusion and empowering
individuals to make informed financial decisions, thereby enhancing their personal and
collective economic well-being.

In the discourse surrounding financial literacy, differing perspectives emerge regarding its
scope and components. See and Baronovich (2012) contend that financial education and
financial knowledge represent two fundamental dimensions of financial literacy. However,
Huston (2010) offers a contrasting viewpoint, suggesting that financial literacy encompasses
more than just these two elements.

According to Huston (2010), while financial education and knowledge are undoubtedly
integral aspects of financial literacy, they only scratch the surface of its broader scope.
Financial literacy extends beyond mere acquisition of knowledge or participation in
educational programs; it encompasses a deeper understanding and application of financial
concepts and principles in real-world contexts.

Huston's perspective implies that true financial literacy involves not only possessing factual
knowledge about financial matters but also demonstrating proficiency in applying this
knowledge effectively to make informed financial decisions. It encompasses the ability to
critically evaluate financial information, weigh risks and benefits, and navigate complex
financial landscapes with confidence and competence.
By broadening the definition of financial literacy to include these additional dimensions,
Huston emphasizes the importance of practical application and critical thinking skills in
financial decision-making. This holistic view of financial literacy underscores its relevance in
empowering individuals to manage their finances effectively and achieve financial well-being
in today's increasingly complex financial environment.

Bhushan and Medury (2014) put forward a crucial insight into the realm of financial
literacy, asserting that fostering positive financial attitudes among individuals is paramount
for the success of financial education initiatives. While providing individuals with financial
knowledge and skills is undoubtedly important, Bhushan and Medury argue that instilling
favourable attitudes towards finance is equally crucial.

Their conclusion underscores the idea that simply imparting financial knowledge may not
suffice to improve financial literacy outcomes. Instead, efforts should also focus on
cultivating attitudes that promote prudent financial behaviour and decision-making. This
entails fostering attitudes of responsibility, discipline, and long-term planning, which are
essential for sound financial management.

By emphasizing the importance of attitudes alongside knowledge, Bhushan and Medury

highlight the holistic nature of financial literacy. They suggest that a comprehensive approach
to financial education should address not only the acquisition of financial skills but also the
cultivation of positive attitudes towards financial matters.

In essence, Bhushan and Medury's findings imply that financial literacy initiatives should aim
not only to enhance individuals' financial knowledge but also to shape their attitudes.

and beliefs about money and financial planning. Only by fostering a positive mindset towards
finance can the full benefits of financial education programs be realized, leading to improved
financial well-being and outcomes across generations.

Ajzen (1991) delved into the intricate relationship between individual behaviours and
financial attitudes, offering a nuanced perspective on how financial attitudes are formed.
According to Ajzen, these attitudes are not arbitrary but are the result of specific behaviours
exhibited by decision-makers. These behaviours, in turn, stem from a complex interplay of
economic and non-economic beliefs held by the individuals. Ajzen posits that an individual's
financial attitude is deeply embedded in their belief system, which encompasses their views
on the economic outcomes of their actions as well as the social and personal ramifications of
these actions.

This perspective suggests that to understand and possibly modify an individual's financial
attitude, one must look beyond mere financial literacy or knowledge. It requires an
understanding of the broader belief systems that influence their economic behaviours. For
instance, an individual's propensity to save or invest is not merely a function of their financial
understanding but also of their beliefs about the future, the value they place on financial
security, and their confidence in managing financial risks.

Ajzen's theory illuminates the path to altering financial behaviours not just through education
but by addressing the underlying beliefs that give rise to these behaviours. This approach
advocates for a more holistic strategy in financial education and behaviours modification
programs, one that recognizes the importance of both economic and non-economic beliefs in
shaping financial attitudes. By acknowledging and addressing these core beliefs, efforts to
improve financial attitudes and behaviours can be more effective, leading to lasting changes
in financial decision-making.

Ibrahim and Alqaydi (2013) delved into the intricate relationship between education,
personal financial attitudes, and the dependence on credit cards. Their research shed light on
a crucial aspect of personal finance management: the pivotal role that education plays in
shaping individuals' financial attitudes and behaviours. By providing comprehensive financial
education, individuals can develop a more responsible and informed attitude towards money
management, which in turn, can lead to a decreased reliance on credit cards and other forms
of high-cost debt.

The significance of financial attitudes extends beyond mere preferences; it influences

financial behaviours, which are critical determinants of financial well-being. Past research in
this area consistently highlights the connection between financial attitudes and financial
literacy, especially among the youth. This link underscores the potential of financial
education to not only enhance financial literacy but also to foster healthier financial attitudes.
As young individuals form their financial habits and attitudes early on, the impact of financial
education is particularly pronounced in this demographic.
Furthermore, the studies suggest that financial attitudes and behaviours are closely
intertwined, with each influencing the other in a cyclical manner. A positive financial attitude
encourages prudent financial behaviour, such as budgeting, saving, and investing wisely,
which in turn, contribute to an individual's overall financial well-being. Conversely, negative
financial attitudes can lead to risky financial behaviour’s, such as over-reliance on credit and
inadequate savings, which jeopardize financial health.

The findings of Ibrahim and Alqaydi (2013) and subsequent research in this field highlight
the transformative power of education in reshaping financial attitudes and behaviours. It
underscores the necessity of integrating comprehensive financial education into curricula for
young people. Such education should not only aim to impart knowledge but also to instil a
positive and responsible attitude towards financial management. Ultimately, fostering a well-
informed and positive financial attitude among the youth is a critical step towards enhancing
financial literacy rates and promoting a more financially secure and literate society.

Research by Grable and Lytton (1998) and more recent studies such as Kasman,
Heuberger, and Hammond (2018) suggest a strong correlation between attitudes towards
money and financial literacy among youth. The prevailing attitude towards finance and
money significantly shapes the financial behaviours and decisions of students, ultimately
influencing their level of financial literacy. A positive attitude towards finance is often
associated with proactive financial behaviour’s, such as budgeting, saving, and investing,

which are essential components of financial literacy. Conversely, a negative attitude towards
money can undermine students' financial decision-making abilities and impede their journey
towards financial literacy.

The impact of attitude on financial literacy underscores the importance of cultivating a

positive mindset towards finance among young individuals. A favourable attitude towards
money not only motivates students to actively seek out financial knowledge but also
empowers them to make informed financial decisions. By fostering a positive attitude
towards finance, educators and policymakers can create an environment conducive to
enhancing students' financial literacy.

Conversely, a negative attitude towards money can act as a barrier to financial literacy,
hindering students' willingness to engage with financial concepts and practices. Students with
a pessimistic outlook on finance may be more prone to financial procrastination or avoidance,
which can perpetuate financial illiteracy and inhibit their financial well-being eventually.
In conclusion, attitudes towards money play a crucial role in shaping the financial literacy of
youth. A positive attitude fosters proactive financial behaviours and decision-making, while a
negative attitude can hinder the acquisition of financial knowledge and skills. Educators,
policymakers, and parents must recognize the significance of attitude in financial education
and strive to cultivate a positive mindset towards finance among young individuals, thereby
empowering them to navigate the complexities of personal finance with confidence and
competence.

Aqua and Zulfiqar (2015) embarked on a comprehensive study involving 300 working
women in Pakistan, all of whom were employed in sectors outside of finance. The primary
aim of their research was to explore the intricate relationships between financial attitudes,
financial literacy, and financial behaviours among this demographic. Their findings revealed
a significant and positive correlation among these key facets of financial understanding and
management, highlighting the interconnectedness of financial attitudes, literacy, and
behaviour’s.

The study underscores the critical role that financial attitudes play in shaping an individual's
approach to financial literacy and subsequent financial behaviour. A positive financial attitude
was found to be a strong predictor of a higher level of financial literacy. This, in turn,
positively influenced financial behaviour’s, suggesting that an individual's perspective and
feelings about finance significantly impact their willingness and ability to acquire financial
knowledge and apply it effectively in their daily lives.

Furthermore, Aqua and Zulfiqar's research provides valuable insights into the empowerment
of working women through financial education. It suggests that enhancing financial literacy
among women not only boosts their financial behaviours in terms of savings, investment, and
prudent spending but also fosters a more positive attitude towards financial management
tasks. This positive loop, where improved financial attitudes lead to better financial literacy,
which in turn leads to healthier financial behaviour’s, highlights the potential for targeted
financial education programs to significantly impact women's financial well-being and
independence.

The findings from this study contribute to the broader discourse on financial literacy,
particularly among women in the non-financial sector, by emphasizing the need for
comprehensive financial education that addresses not just the cognitive aspects of financial
knowledge but also the emotional and attitudinal dimensions. By fostering positive financial
attitudes and enhancing financial literacy, it is possible to influence financial behaviour’s
positively, leading to more informed and empowered individuals capable of making better
financial decisions.

In 2015, Sanderson offered a comprehensive definition of financial literacy, conceptualizing

it as the ability of an individual to apply their knowledge and skills towards making informed
financial decisions and managing financial resources efficiently. This perspective underscores
the importance of financial literacy as a cornerstone for personal financial management,
highlighting its role in enabling individuals to navigate the complex landscape of financial
products and services effectively. Building on this foundation, Sanderson advocates for the
integration of financial education programs within school curriculums as a strategic approach
to elevate financial awareness and literacy among students and adolescents. The argument for
school-based financial education programs rests on the premise that early exposure to
financial concepts and decision-making frameworks can significantly impact young people's
ability to manage their finances as they transition into adulthood. By embedding financial
literacy education within the school system, students are provided with the tools and
knowledge necessary to make prudent financial choices, fostering a generation that is better
equipped to achieve financial stability and success.

The emphasis on school-based financial education aligns with broader educational goals of
preparing students for real-world challenges, recognizing that financial competence is as
crucial to individual well-being as academic and professional skills. By prioritizing financial
literacy from a young age, educational systems can play a pivotal role in shaping financially
savvy citizens who can contribute positively to their own economic well-being and that of the
wider community. Sanderson's insights into financial literacy and education highlight the
critical need for comprehensive, accessible, and age-appropriate financial education that
empowers young people to build a solid foundation for their financial futures.

Research methodology

This research aims to investigate the financial awareness and behavior of students.
The methodology will involve a multi-pronged approach to gather comprehensive
data and achieve the outlined objectives:

Sample Selection and Recruitment

  Target Population: The target population will be college students across
various disciplines and year levels.
 Sampling Technique: A stratified random sampling technique will be
employed to ensure representation from different academic backgrounds and
year groups. This provides a more generalizable picture of the student
population.

Data Collection Methods

Survey Instrument: A self-administered questionnaire will be developed to collect

data on students' financial knowledge, behavior, challenges, and goals. The
questionnaire will be designed to be clear, concise, and engaging for student
respondents.

Financial Knowledge: The questionnaire will assess knowledge of budgeting,

saving, debt management, credit cards, and basic financial products using multiple-
choice, true/false, and short answer questions.

Financial Behavior: Questions will explore spending habits, saving patterns, credit
card uses, and debt accumulation through frequency and amount-based inquiries.

Challenges and Goals: Open-ended and Likert scale questions will delve into
financial challenges faced by students (e.g., student loan burden, living expenses)
and their financial goals (e.g., saving for education, future purchases, retirement).

Focus Groups (Optional): Conducting focus groups with a smaller sample can
provide deeper qualitative insights into student perspectives and experiences. This
could be particularly valuable for exploring challenges and goals in greater detail.

Data Analysis

 Quantitative Data (Survey): Descriptive statistics will be used to summarize

the financial knowledge, behavior, challenges, and goals of the student
population.
 Qualitative Data (Focus Groups): Thematic analysis will be conducted on
transcripts from focus groups to identify recurring themes and patterns in
student experiences and perceptions related to finances.

Ethical Considerations

 Informed Consent: Participants will be provided with an informed consent

form explaining the study's purpose, data collection procedures, and how their
information will be kept confidential.
 Anonymity and Confidentiality: All data will be anonymized, and
participants will not be identifiable in the final analysis.
Additional Considerations

 Pilot Testing: The survey instrument will be piloted with a small student
sample to assess its clarity and identify areas for improvement before full-
scale data collection.
 Data Security: Data will be stored securely following institutional data
protection protocols.
 Dissemination of Findings: The research findings will be disseminated
through academic journals, conferences, and presentations tailored for
student audiences to raise awareness and inform interventions.

Expected Outcomes

This research is expected to:

 Provide a comprehensive picture of students' financial awareness and

behavior
 Identify key challenges and goals related to student finances
 Inform the development of effective interventions to improve financial literacy
and promote responsible financial behavior

Data analysis, interpretation and presentation