Why Financial Literacy is Important, and What Are the Tips to Grow It?

The Indian economy is on an upward trajectory, with a rapidly growing GDP competing with some top nations globally. Digitalization and economic advancements also pave the way for a more progressive future.

However, despite the promising growth, one critical aspect still limits the full potential of national capital formation and long-term economic stability - financial literacy in India.

Global Financial Literacy Comparisons for 2025

Here are some significant stats to explore:

• India has a 77% adult literacy rate, but only 24% of adults are financially literate. The world average is 42%.

• India ranks 73rd among 144 countries in financial literacy, with only 19% of millennials understanding interest rates, loans, or investment jargon.

• With 82% of Indians relying on electronic payment systems, only 31% of them understand the risks of online transactions.
  

Here are the latest global comparisons for 2025:

Country	GDP (in Trillion USD, 2025 est.)	Financial Literacy (%)
Canada	2.12	68%
United Kingdom	3.02	67%
Germany	4.47	66%
United States	21.4	57%
India	3.15	24%

The importance of financial literacy lies in building money management skills, understanding budgeting and saving tips, and encouraging financial planning for beginners.

Why Financial Literacy Matters

The importance of financial literacy cannot be overstated. It is key to ensuring personal financial well-being and national economic stability. It gives individuals the information they need to make informed decisions about savings, credit, insurance, and investing.

Here are some reasons why financial literacy is the number one priority:

1. Improved Decision-Making: Knowing how to compare financial products, e.g., choosing between SIPs and FD investments, allows people to choose the best financial tools.

2. Avoidance of Debt Traps: Knowledge of compound interest, loan terms, or expense ratios prevents people from getting trapped in fraud, high-interest traps, and unnecessary loans.

3. Financial Freedom: Budgeting and saving tips for retirement and building smart money habits help individuals deal with economic crises.

4. Generation of Wealth: An educated investor will invest in growth-based assets like SIPs or mutual funds and is less inclined to keep money stagnant in low-interest savings accounts.

5. Macroeconomic Stability: Increased savings at the national level and wise investments reduce inflationary pressure, increase the household GDP contribution, and encourage entrepreneurial capital formation.

Pro Tip: AssetPlus bridges these gaps through products that help users plan for the long term, whether for a child's education or retirement. It offers an easy UI, real-time support by expert MFDs, and smart SIP suggestions to motivate smart money habits with low barriers to entry.

Financial Literacy: Key Components

Building financial awareness begins with a firm grasp of five key topics. Here are the personal finance basics of sound financial habits:

Component	What It Means	How to Improve Financial Literacy
Budgeting	Managing monthly income, tracking expenses, and controlling impulse buying	Use budgeting tools, expense graphs, and smart alerts.
Saving	Creating emergency funds and saving for goals like travel or education	Invest in goal-based SIPs, and learn about tools like auto-debits and saving reminders
Investing	Understanding equities, debt, hybrid funds, and their risk-return profiles	Use the AssetPlus Fund Finder Tool to curate fund lists based on age, income, and risk appetite
Debt Handling	Responsible EMI management, credit score awareness, and loan planning	Use financial calculators, payment alerts, and credit evaluation tips.
Insurance	Protection against life events like health emergencies or accidents	Embedded insurance comparisons and term plan suggestions

Pro Tip: AssetPlus has a 360° installation whereby all these columns intersect, thus being ideal for all those who wish to learn about beginner financial planning.

Financial Education Tips to Improve Financial Literacy

Begin these effective strategies to strengthen your financial awareness and inculcate smart money habits:

1. Learn from Experts and Trusted Influencers

Take lessons from personal finance teachers like CA Rachana Ranade, Sharan Hegde, or Ankur Warikoo. Their videos are very helpful for working professionals who don't have the time to learn personal finance topics like budgeting, insurance, or SIPs.

2. Learn through Apps like AssetPlus, ET Money, Groww, or Walnut

Modern financial apps turn you from a beginner to an investor:

• Collaborate with experts and learn about the significance of savings through SIPs, insurance, mutual fund investments, etc.

• Begin SIPs as low as ₹500/month.

• Plan for real-life financial goals (wedding, house down payment, child's education).

• Steer clear of AI-recommended financial education tips and rely on experts who understand your financial objectives and risk profile.

• Monitor, rebalance, and learn from live performance reports.

This DIY learning builds not just literacy but discipline also.

3. Attend Free Financial Literacy Workshops & Certification Courses

Attend government-certified programs like SEBI's SMART and IRDAI's Insurance Awareness Drives or follow AssetPlus on its social platforms. You benefit from regional language webinars and finance campaigns that reach deeper audiences. Free crash courses and the NSE Academy website portal can also provide access to education infrastructure. Enhance your investment skills with AssetPlus by gaining expert insights using tools like BizGuru, personalized guidance from expert MFDs, and maximizing your returns as you become a better investor.

4. Read Books and Blogs

Read Rich Dad-Poor Dad, Let's Talk Money, or The Total Money Makeover to discipline yourself. Add zing by reading blogs on fund news, tax-saving tips, SIP comparison, and insurance planning.

5. Budget & Track Goals

Utilize simple Excel spreadsheets, mobile apps, or AssetPlus dashboards to:

• Make and stick to monthly budgets.

• Start SIP auto-debits.

• Track spending, detect leaks, and rebalance goals quarterly.

  
  

Role of Employers and Schools

The good news is that 52% of India's population comprises millennials and Gen Z, much higher than the global average of 47%. This allows schools and organizations to enhance financial planning for beginners! India boasts a vast student base, where more than 250 million students attend school, but only 16.7% have a basic understanding of finance and money management.

Here are some financial education tips:

• Schools in Indore are leveraging budgeting apps that simulate personal finance to make financial education more interactive.

• Modern schools incorporate gamified budget simulations and mock trading apps to deliver investment and personal finance basics.

• Many are partnering with AMFI or SEBI for quiz contests and SIP contests.
  

Employers Facilitating Financial Planning for Beginners

Workplace-based financial education is becoming a global best practice to improve employee well-being and reduce financial stress.

Today's HR departments need to go beyond EPF and CTC disclosure. Employees need money management skills to avoid debt traps and deal with lending by credit cards, EMI problems, and underinsurance.

Recommendations for Employers:

• Roll out onboarding modules and incorporate SIP contributions in payroll design.

• Conduct quarterly wealth-building clinics in association with MFDs at AssetPlus.

• Implement pay-linked investment dashboards with gamification.

Also Read: 7 important accounting tips to help streamline your personal finances

Final Words

India's economic future has to be economically savvy. Each young professional who knows compounding, each homemaker saving tax in ELSS, and each student learning the art of saving contributes to a richer, stronger country.

Financial literacy is a survival necessity that determines one's capacity to retire comfortably, invest in one's child's future, purchase a home, or avoid falling into a debt trap. With digital-first tools such as AssetPlus, beginning has never been simpler.

With its AI-powered risk assessments, SIP automation, handpicked mutual funds, and specialized MFD support, AssetPlus is not just an app; it's a platform for lifelong learning. From your first SIP to your retirement strategy, it evolves with you.