The journey of GenZ to GenFin - Importance of Financial Literacy
Remember when parents said, “You won’t understand the worth of money unless you earn it”. But is it true for the individuals who earn their money, is a question.
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Personal Finance
- Swati Tripathi
- 2022-12-10
- 03 min read
#financial planning
#money saving

Students should be taught finance management skills way before they start earning so that it is a smooth transition from pocket money to salary. 

Studies reportedly show that a significant percentage of young adults were found to be "financially precarious" because they had poor financial literacy and lacked finance management skills and income stability.  

As per a global survey by Standard & Poor’s Financial Services, less than 25% of adults are financially literate in South Asian countries.  

For an average Indian, financial literacy is yet to become a priority. India is home to 17.5% of the world’s population but reportedly only around 24% of its adult population does not understand even the basic financial concepts. 

According to its literal definition, financial literacy is the ability to use skills and knowledge to take effective and informed finance-management decisions. 

Financial literacy should start with managing pocket money and ensuring it lasts for a month, understanding that chai wale ki udhari (a tea vendor’s credit) is a never-ending cycle and making efforts to break that cycle. 

Also Read: Digital Payment Methods – Making Life Easy

Let’s see how to manage finances in today’s changing world: 

Finance - Budgeting 

Since you are spending a stipulated amount of money every month you would be aware of spends that would occur. Therefore, you can just jot down all the expenses, prioritise your spending. Post that, if you are going overboard - you can check what could be skipped for the month. 

As you go on budgeting every month, it will become a habit and then you will soon start saving some money for your Wishlist.  

Like Jeetu Bhaiya (in Kota Factory) says, “21 din mein koi bhi aadat lag jaati hai, koi bhi aadat choot jaati hai. Toh yehi karna hai.” (Anyone can form or discard a habit in 21 days, that’s all we have to do) 

Finance - Wants vs Needs 

We often think want and need are synonyms but it’s not true when it comes to finance management.  

At first glance, the difference between wants and needs might seem obvious: “wants” are things you want to have; “needs” are things you need to have. 

But it’s more complicated than that. 

Think about going to the grocery store. Food is a need, so anything you buy there is a need too, right?  

Nope, that’s not true. Soda, expensive branded products, prime cuts of meat — all of these things can be done without. 

While shopping, always ask yourself if you want it or need it, and take an informed shopping decision. 

Finance - Debt 

Debt is loans or credit you take because you need excess money at a given time. It can be a big loan, credit card usage, or a small udhari (credit). 

You should be aware of the following things before resorting to the option of debt: 

  1. Is it a need or a want? 

  2. Can you do without it? 

  3. Could it be postponed till you get your own money? 

  4. Would you be able to pay it off in time? 

Finance - Emergency Fund 

While managing your finance the most important thing is having an emergency fund for any unforeseen situation. 

An emergency fund also helps you meet day-to-day needs in case your pocket money or income is delayed. 

Ideally, experts believe an emergency fund should be a total sum of six-seven months income. Hence, it can help you sustain for six months in case of loss of income or unforeseen situations. 

Also Read: 3 Important Lessons Money Has Taught Us


Now that you have decided to manage finances better, as a prudent step - you can try to understand personal finance better. This can be done with the help of YouTube tutorials, online reading material, business news – that can help you invest and grow financially. 

Also Read: Let’s Decode Personal Finances for Gen Z: The 50-30-20 Rule


  1. How much should I keep as an emergency fund? 

Emergency fund varies from person to person, usually, 10% of the amount that you save after spending can be kept as an emergency fund. Ensure that over a period of time you have 6-7 months income as an emergency fund.

PS – Don't mix up your savings with an emergency fund. 

  1. What if I am over budget in a month? 

That’s okay. We are human beings, so don’t worry if you are over budget think of the ways you can make it up in the next month.  

Also Read: 6 Digital Banking Myths that you should knock off!


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