July 26, 2012

Financial Literacy in School – very soon

Soon your children will start getting financial literacy in their school itself. A lot of developed countries like the UK, Netherlands, Spain etc have their national strategy for Financial education in place and a lot of other countries like India have been thinking and formulating this for a long time. Recently a draft for the financial literacy program was published on the RBI website.

You must have seen and experienced that our country average financial literacy is at pathetic levels and so many financial lives are destroyed just because they do not have minimum basic knowledge on personal finance to protect themselves. If your name is in CIBIL, its because you never knew the importance of right credit behavior, If you were missold (misbought) any financial product by an agent or financial planner (why not) – You probably always concentrated on numbers and not the hidden language and never were able to conclude the the returns from that financial product. In short you were not that financially literate.

The mission of the intiative is like this

To undertake massive Financial Education campaign to help people manage money more effectively to achieve financial well being by accessing appropriate financial products and services through regulated entities with fair and transparent machinery for consumer protection and grievance redressal.

You must probably be fantasicing that your kids will not be like you in terms of financial literacy and they will have a better level of information and understanding about personal finance compared to you. Thats where this national level initiative on financial literacy will help. It’s expected to be implemented in next 5 yrs period and you can be sure that it will arrive sooner or later, that will be a big day ! .

So what all your kids will learn about money in their Schools ?

There are 15 sections and sub sections defined and I can bet that even we all must grab the school level books on personal finance when it comes, because the list of topics to be taught is pretty good and deep. It will really help in shaping up the financial lives of those kids who study it. The best part is that as this will be school subject, they cant escape it. With their raw minds, they will be more open to learn it, unlike people today “who do not have time” . Once they learn about personal finance in school level, they will have a better chances of managing their financial lives when they start earning or well before it. Here are the topics (mostly spread across the full year) – Imagine something like “Hey I am bored in Maths Class, which is the next one” – “Personal finance Class!

1. Money

  • History of Money

  • Barter System

  • Importance and Concept of money

  • Coins

  • Paper money

  • Plastic Money

  • E –Money

2. Household Economics

  • Earnings

  • Nature of Earnings

  • Needs and Wants

  • List your expenses

  • Find Simple ways to save money

  • Expenditure, Cost and Prices, Inflation

  • Savings & Thrift

  • What you save is what you earn

  • Borrowing – Mild Definition

  • Investment – Mild Definition

  • Interest — Mild Definition

  • Interest rate — Mild Definition

3. Banking

  • Definition

  • Role of a Bank – in growth of saving and Investment

  • Types of banks

  • Services offered by banks

  • Deposits and Loans

  • Types of A/c

  • Opening a bank A/c

  • How to Transact with banks

  • KYC norms – (A/c opening form, Address Proof)

  • How to read bank statement

  • Banking products and services

  • Net Banking

  • Calculating Interest –Saving, FD, Simple and Compound Interest

  • Power of compounding

  • Loans

  • Types of loans

  • Definition of EMI

  • Calculation of EMI

  • Difference between Banks and Money lenders

  • Micro Finance

  • How to make a complaint -Banking complaints

  • Ombudsman

  • Basic of Foreign Exchange

  • Importance and Use of Foreign Exchange

  • Check Counterfeit Currency


  • Regulator – Role of RBI

4. Investment

  • Piggy bank

  • Principles of Investment- Safety, liquidity and return

  • Bank saving

  • FD, RD, Post Office Savings


  • PPF

  • NPS

  • Bonds and debentures

  • Shares

  • Mutual funds

  • Gold and Silver

  • Real estate

  • Arts and other investments

  • Commodities

  • Asset allocation

  • Risk and Return

  • Basics of Investment- liquidity, credit

  • Compounding and Time value of money

  • Nominal and Real Return(Inflation)

  • Effect of taxes

  • Long term v/s Short term

5. Behaviour Aspects

  • Concept of Needs and wants

  • Helping the needy

  • Spend wisely v/s waste spending

  • Conspicuous Consumption-lavish

  • Impulsive spending

  • What you save is what you earn

  • Using money responsibly

  • Avoiding cash payments

  • Insisting on bills

  • Dangers of excessive borrowing

  • Repayment of loans

  • Make informed choices

  • Ownership of your financial decision

  • Take care of your old ones

  • Tax payment

  • Insider Trading

  • Up Keep your Financial records

  • Free advise may be injurious

6. Financial Planning

  • Meaning

  • Household financial health check up

  • Important life stages

  • Education

  • Medical and other Emergencies

  • Social obligations

  • Goal setting

  • Budgeting

  • Marriage

  • Buying a house

  • Buying a vehicle

  • Plan a vacation

  • Retirement planning

  • Price of procrastination

7. Insurance

  • Meaning

  • Need and Purpose

  • Loss protection

  • Life ,non life and health

  • Benefits of Insurance

  • Term plans

  • Investment plans

  • Hybrid plans -Ulip etc

  • Agents, advisors

  • Role of Insurance companies

  • Regulator – IRDA

  • Ombudsman

  • How to take a new policy

  • How to revive old policy

  • Transaction cycle

  • Nomination

  • Assignment

  • Claims settlement
  • Exclusions
  • Difference between Insurance and Investment

8. Retirement and Estate planning

  • Concept

  • PPF, EPF, Gratuity, NPS, SCSS

  • Financial need after retirement

  • Three Stages -Saving, Accumulating and Dis-saving

  • Calculation of Corpus required after retirement

  • Protection from Inflation

  • Reverse Mortgage

  • Definition of will

  • Making a will

9. Securities markets

  • Entrepreneurship

  • Forms of Business enterprises

  • Company definition

  • Shares

  • Primary market – Reading a prospectus, what to read

  • Secondary market

  • Issuers, Investor and Intermediaries

  • Regulator – Role of SEBI

  • Dealing in Securities market

  • Demat account and Depository

  • ASBA

  • Broker

  • Stock exchange

  • Grievance and Redressal

  • Financial Advisor, CA, CFP, CPFA

  • Basic terms and processes in Securities Market

  • Market rumors and tips

  • Sources of reliable information

  • What are indices ( Sensex and Nifty)

  • Investment v/s Speculation

10. Use of Technology Do and Don’ts

  • Password protection

  • NEFT and RTGS

  • ATM

  • Online trading

  • Internet banking

  • Need for keeping mobile number with banks

  • Three in one account

  • Need of protecting your online account

  • Functioning of stock exchanges

  • Depository working mechanism

  • Algorithmic trading

  • Financial functions using excel

11. Scams, Frauds and Ponzi Schemes

  • Free tips

  • Insider trading

  • Money laundering

  • Phishing mail about winning a lottery

  • Price rigging

  • Dabba trading

  • Bogus companies

  • Multi level marketing

  • Schemes not regulated by anyone

  • Real Estate frauds

  • Banking and credit card scams

  • Preventive measures from getting duped

12. Borrowings Need for borrowing

  • Need for borrowing Source of borrowing

  • Merit and demerits of borrowing

  • How much to borrow

  • Avoid life of credit

  • Comparing interest rate on loan offering

  • Importance of timely payment

  • Avoid default

  • Avoid borrowing for conspicuous consumption

  • Credit cards – Merits and Demerits

13. Consumer protection and redressal mechanism

  • Rights of Consumers

  • Applicable to Financial services

  • Filing a complaint

  • Complain to entity concerned

  • Ombudsman

  • Regulators

  • Arbitration

  • Consumer courts

  • Govt. Websites -(PG Portals)

  • Investor Associations

14. Taxes

  • Meaning

  • Need of taxes

  • Types of taxes

  • How taxes impact income

  • Income, wealth and gift tax

  • Service tax, STT, Stamp Duty

  • Tax planning v/s tax evasion

  • Tax rates

  • Tax free bonds

  • Tax saving investment

15. Importance of maintaining financial records

  • PAN and its utility

  • Aadhar card

  • Demat Account

  • Bank statements and passbooks

  • Insurance policies

  • Tax return

  • Property documents

  • Helpline numbers of service providers

Note that this curriculum is also planned to be delivered to non-school people like adults through other various means. School is just one place where it will be implemented.

What do you think about this Financial Literacy Initiative ?

What do you think about this initiative ? Do you think its going to be one of the best things in our country in the area of financial literacy ? What kind of changes do you see after this Financial Literacy Initiative comes and our next generation arrives !

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vikas phadnis
vikas phadnis
11 years ago

Hi Manish,
I have a business proposal for you. Do write back on my ID mentioned above.



Ram Mohan
Ram Mohan
11 years ago

Wow! This is a must read not just for kids but everybody in this country!

Pulkit Popli
Pulkit Popli
11 years ago

Perfect Initiative..
I am delighted to see the content of their upcoming book. Very well set..

Vandhana Karthick
Vandhana Karthick
11 years ago

Good start by Government but in India they speak but they do delay and they will not implement the same sometimes.If they implement this its a great things sure Government should get into the syllabus in school from 6th standard so they know about money and how to save that. But we should take care it should not get wrong face into children s mind ie.scam, fraud, and others.

11 years ago

Kudos to the move! really feel the need of it. It would sensitize the kids with the importance of money which is lacking in many kids today.

Swetank Saroj
Swetank Saroj
11 years ago

Hi Manish,

It is such a nice article and good to know that RBI is thinking of starting this course in Personal Finance.

As everyone has said the biggest concern is implementing this complete syllabus (which is simply awesome). But their are other big problems like in India master plan is always good (go and check any city planning) but when they start changing it to make it suitable (in reality suitable for people who may lose money from these kind of master plan); it become scrap.

As the basic of finance do not change much but the investment market and products keep changing and this calls for a frequest change/update in Syllabus. How frequently our school syllabus change?

This course can be started from 6th ownward with baisc and then moving to higher topics with classes..practical examples and tests of undertsanding is also required ..please note not the rote learning or just mugging it up.

I remember there are chapters in NCERT math textbook on shares and debentures, being at the end of the book my teacher never taught those.


11 years ago

Wanting to make my own kids aware of money I wrote a book which explains concept like: Bank, Credit cards.
The book can be downloaded Free of cost from our website bemoneyaware.com
There are some simple games like : match the coins, Guess the costs , Jigsaw puzzles also.

11 years ago

A very good initiative by the RBI and this is another step by RBI in teaching kids about money. There are some comic books about Bnaking, Foiled notes, history of money on RBI website.

I am some queries about the program
1) age group to which the program is targeted. After 11th kids are short of time – studying for 12th and competitive exams that they have to take.
2) Do they need to know about Retirement Planning, Securities Market in school?
3) How will they teach – will it be just regular class -one way communication? Will there be tests, exams.
4) Who will teach them – regular teachers or school needs to appoint some one?

RBI is not the first one to do so. USA and many others have done it. Wondering how successful they have been- A Step Backwards in Spreading Financial Literacy .

Jatin Kacha
Jatin Kacha
11 years ago

Indeed good initiative by government.

Having learn at the school level, one will have a basic understanding of what investement, banking, insurance etc. are, how they work, where to park their money, where not to invest etc.

If we look at present scenario, people know about insurance, but they only look at LIC endowment plans. They prob. dont even know about terms plan.

There are different ways to do insurance (like manish explain http://jagoinvestor.dev.diginnovators.site/2012/02/create-best-child-policy.html) & let your hard money to earn itself by parking it into different instruments like MF, PPF, FDs etc.

Chinmoy Sur
Chinmoy Sur
11 years ago

I can recommend a book that has all about basic financial literacy for everyone!
Everybody love to read the book as it write like story. I feel that the book is one of the Must Read Book in our life.
I expect comments from who read the book..

Reply to  Chinmoy Sur
11 years ago

Amazing book and it shows rules of wealth have not changed over the years.
Have referred to the book and it’s laws(in image) in my article Parents & Us:Changes in the Way We Earn,Spend,Invest
There is free pdf available on net.

Reply to  bemoneyaware
11 years ago
R G Budhar
R G Budhar
Reply to  bemoneyaware
11 years ago

Many thanks, downloaded and reading.

Reply to  R G Budhar
11 years ago

Thats great..looking forward to your comments

Alby Antony
Alby Antony
Reply to  Chinmoy Sur
11 years ago

Yes! Its a wonderful book. I read it recently and it talks about something as simple as saving 10% of your income, however low your income be and how much ever your debt be. And how this can grow into some thing enormous on how you invest.

Its a must read and like you have said, even school kids, high school kids can read and comprehend it.

11 years ago

I feel I need to go through it also. Sometimes even the basics in this aspect are not known. What a student will know now, we don’t know after going through 1/4th or half of our life span. We start earning and start spending/saving as and when someone says, NO PLANNING.

Ravi Datt
Ravi Datt
11 years ago

Hi Manish

Good Post and good initiative by RBI. I think this should be made compulsory for all streams of education and subjects (Art,Science, Commerce,Engineering,Medical etc..or any new emerging subject). One more thing this should start from 11th standard onward and continue till graduation.
My reasoning for till graduation: At this age a person starts thinking about money and what he can do with that. After graduation a person gets jobs and starts his life planning so why not financial planning also. This will also make him early investor and will be benefited in long term.

Also he can work what he is interested and not a regular job. A person and his/her family will be financial secure and independent.

What do you think about this…

11 years ago

Hi Manish

Indeed a very good intiative from Govt. This will help children to understand the basic concepts as well as inculcate some financial discipline which will come through this syllabus.
Syllabus looks very vast and just wondering how the childeren who are already under tremendous pressure and burden with existing syllabus will cope up with this.
I do remember the financial literacy beginning at home in my time with the piggy bank concept, but beyond that there was no prgoress.
Hope this will make our next generation more sound and savy for the financial life and value money more than the present generation…

11 years ago


Reading this…cant wait to see the future of LIC :-D. May be they too will change once citizens are empowered.

What say?

Rakesh Guggilam
Rakesh Guggilam
11 years ago

Good move by RBI. This syllabus is very vast. Atleast kids will learn something. Most of the syllabus need to be implemented in college. Otherwise they can’t understand the motto of the financial education.

Indian educational system is like, most of the students study for getting marks. Without knowing the usage of the subject, they study the concepts (I am one among them). Teachers and parents should make sure that, kids shouldn’t study this subject for grades.

11 years ago

The introduction of finanacial literacy to young minds is long over due.But it should be programmed carefully , level by level, in to the students’ curricula preferably from the secondary school level -say ,from 9th std and aboue. But in any case ,it should not be dumped on the students’ minds ,in a rhetoric way ,the way science subjects are being introduced in moderrn school curricula.The need for teachers’ training is basically not realised still.The success of such an effort lies in reviewing critically how far the student community has appreciated the genuine value of such knowledge in their own lives after say XII std, intermedate and graduation levels. So,while the idea is laudable, i feel it should not be left to impractical educationists of today. . The “education “at large is in a miserable state in school and colleges to day and needs radical review,I strongly feel.

11 years ago

Good one , Manish. I totally agree that financial education is must for future generations. Even though content looks overwhelming it must be part of school education. People make bad money choices partly because they are not informed about basic stuff. I mean , we are in 2012 and I still know some folks who take out money from their credit card account !

Lets just hope “financial education” will be next revolution that sweeps India. Cannot wait to see the day, when school kids will be discussing ULIP, term insurance, MF SIP’s etc. for exam.

11 years ago

Good to hear that!

My view is that all schools should have :
1. financial
2. health
3. passion oriented learning

These all can be accomodated if some of least needed subjects are removed.

11 years ago

Dear Manish,

I don’t think that Govt will not introduce Financial Literacy in Schools or College. If they do, LIC, other Insurance Organizations would be shut down their operations.


11 years ago


Its a GREAT initiative. Govt should have done this 10 years ago. Better late then never.

I am wondering how will someone teach Personal financial class when the teacher is not good at his/her personal finance?:)

It is like teaching swiming but the instructor is standing outside the pool without prior experience

Teaching Master Of Business Administration (MBA) without a Business experience

Please share your views