Financial Literacy is the significant predictor of savings behavior, retirement planning, wealth accumulation and wellbeing. Its importance has been increasingly felt for developed and developing countries. With regard to India, the percentage of elderly population is increasing in the background of limited support of exiting social security system which does not commensurate with the needs of elderly and steady and inevitable erosion of traditional safeguards of family care that makes individuals more responsible for their own wellbeing in older age. Therefore, the aim of the present study is to assess the importance of financial literacy for the wellbeing of elderly population. The study is based on the review of literatures and projects conducted on financial literacy. Based on the review, study concludes by stating financial literacy as the need of present generation.
Financial literacy is a component of human capital that can be used in financial activities to increase expected lifetime utility from consumption (i.e., behaviors that enhance financial wellbeing).
India is emerging as the fastest growing economies with a simultaneous shift in its age structure towards aged population and many more structural changes are under its way. In traditional Indian culture, old age is considered as one of the stages of human development, where in a person attains wisdom, maturity, social and economic stability with social recognition and emotional fulfillment, leading to the last phase of life (Planning commission, 1963). The ultimate effect of these changes would be on the financial, emotional, physical, social needs etc. of the aged population who largely depends on their families. Efforts are required to ensure that the elderly do not live a neglected or ignored life; however individuals should also understand that now increasingly it is becoming their own responsibility to ensure their well being in old ages. The financial needs increases manifolds in old age as ageing is generally associated with decline in functional capacity of the organs, decreased ability to cope with the stress of disease or trauma etc that needs medical care and attention. Therefore, there is a need to impart financial education among people to enable them to make an effective and optimum utilization of the available financial resources so that they can atleast satisfy their financial needs in old age. The financial literacy is, thus, emerging as the need of the present generation and world.
Author: Kshipra Jain