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

• CIBIL

• Regulator – Role of RBI

4. Investment

• Piggy bank

• Principles of Investment- Safety, liquidity and return

• Bank saving

• FD, RD, Post Office Savings

• POMIS, NSC

• 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 !