Valuing Financial Literacy with Special Reference to Personal Financial Planning

Abstract

Financial literacy the term is strongly associated with the concept saving, investment, financial services and retirement planning in most of the countries of the globe and the urge for financial literacy has gained the attention of wide range of entities like financial services, organization, community interest groups and education institutes in recent years in developed as well as developing countries after the global financial crisis. As India continues to remain one of the highest savers among the emerging market economies and Gross Domestic Savings (GDS) of the nation constitutes 33.7% of total National Gross Domestic Product (GDP) and the major contributor of this GDS is Household savings but the Capital formation from household saving is not at par with the saving contribution of GDP. The developments during the crisis have confirmed that financial literacy is not a substitute for households' wealth protection but a key element of a consumer protection framework and the tool to fill the gap of saving and capital formation in the nation.

Financial literacy has led to the need of personal financial planning. The process of Personal financial planning encompasses all the money activities during the planner's life. The understanding of financial needs leads to create the awareness and realization that the structure of reasoning and explanation, necessary and sufficient to analyze the crux of the issues pertaining to financial literacy at various stages of life. The paper will focus on constituents of personal finance and benefits of being informed and in this respect and financial literacy should be taken into account to preserve the stability of the global financial system from a large perspective.

Keywords: financial crisis, financial literacy, personal financial planning