The government of India decided to give financial education to its younger generation from school level itself. The master plan of National Strategy for Financial Education is already prepared and posted in the website of Reserve Bank of India. This is from the speech of our Honorable Finance Minister Pranab Mukherjee in the Reserve Bank of India (RBI) and the Organization for Economic Co-operation and Development (OECD) workshop. This is a good movement that our children also will be aware about the value of money. They can also know that what is money and from where it is coming and how one can earn it. They may know how to spend money wisely. They could understand the value of money.
Our government wishes to give the following messages about money to our kids National Strategy for Financial Education program.
Why we should save money. Through this they can understand the importance of saving money. This may teach them how to differentiate needs, necessity and luxury.
Why we should invest money. This may teach them the need of investment and they can differentiate the terms saving and investing. They may learn to make money with money. Grow their money by investing it.
Need of insurance. They could know the basic lessons of insurance. Why we should insure our life and assets. Awareness of Need and importance of insurance will protect them from unexpected financial loss due to any miss-happenings.
Need of regular income and regular pension. This may teach them the importance of earning regularly through work, agriculture or any other sources. They may also be ware about keeping a chance to get regular income after their retirement.
Need of regular saving. They will learn the need and possibilities of regular systematic saving.
Need of adequate insurance protection. Please refer the third point. Through this part they will know the importance of adequate insurance and also the demerits of inadequate insurance.
Need of saving through banks. This will teach them the need of proper banking system and this will help them to avoid persons (money lenders) or institutions charge high unreasonable interest for loan etc.
Keep borrowing limits. This message ensures them the disadvantages and dangers of borrowing beyond their limits.
Borrow from banks. Our kids will be aware to borrow from banks which charge reasonable interest rate with reasonable securities.
Know the Difference between savings and investment. Please refer the first and second points. Our children will be aware about the terms investing and saving which will help them to start saving at an early age and invest these money carefully.
Borrow for generating income. One can borrow for generating income or for increase their expenses. When we borrow for a motor car we have to spend further for fuel and maintenance, but, borrowing for a house which can rent out or can sell with a high value, generates income or growth of money. When we borrow for higher education, the chance of generating income is there, when we get a job after the education.
The National Strategy for Financial Education also teaches them the need of paying back loans in time. The need of insurance and also they will learn the interest pattern of banks and moneylenders.
The abovementioned messages will be given to our children through schools when the financial education schemes come into force. Know more about National Strategy for Financial Education from the website of Reserve Bank of India.