Here’s How Financial Literacy Helps Us Prepare for Unforeseeable Events

The Great Depression of 1929, which began after the biggest stock market crash in history, shaped the generation's perspective on money and created a desire for financial security. We see the ripples of that financial catastrophe with generations today.

In a way, the current pandemic challenges highlight the importance of financial literacy. The existing environment urges us to enhance our financial literacy to be able to weather the storm of any unprecedented events.

Previously, in 2020, when COVID-19 was detected in India and a chaotic situation ensued, my aunt Ruhi was experiencing financial difficulties. I remember her calling me in April when coronavirus cases were at an all-time high, she was stressed out about her finances.

Ruhi's husband was in London for work when the pandemic had struck and the Indian government imposed stringent lockdown restrictions. So he was stuck there because most flights were cancelled and severe protocols had been enforced. This put Ruhi in a position where she had to manage all of the family's finances; her husband would usually manage the finances.

Initially, she coped well with the basics of banking transactions and utility bill payments; being tech-savvy helped. But when her father-in-law tested positive for COVID-19, she was left to handle all of his medical needs on her own. She attempted to communicate with her husband, but owing to the difference in time zones, she was unable to coordinate with him to fully comprehend the financial situation.

​She gave me a call and said, "Mitali, I need you to guide me. My father-in-law is hospitalized because of COVID-19 and as I lost, my job there is a bit of financial crunch. Look at the medical expenses they are sky high, how should I manage? Or should I borrow a small amount through loan?"

I advised her not to borrow because a loan will add to your existing financial crunch later on.

I recollected my uncle had earlier discussed about a health insurance cover for his parents with me. So I suggested that she find out if her father-in-law had health insurance.

They did have a health insurance for her father-in-law. But being unfamiliar with health insurance procedures, she was confused. "I reached out to the concerned person, but he is referring to some premium and claim percentage, which I fail to understand. I am placing you on a conference call with him." She said. So I assisted aunt Ruhi with her father-in-law's health insurance process and required documentation.

Later when things normalised with her family, she called me. "Thank you for helping me out at that stressful time. I really need to improve my financial understanding so that I don't panic in such situations. In fact, Rohit has been insisting that I enhance my financial knowledge so I can equally contribute in financial planning and manage finances appropriately."

I said, "Yes you must attain financial literacy in order to be better at money management. I suggest taking advantage of PersonalFN's special initiative called "Certified Family Guardian" course. You get an exclusive opportunity to learn the finer nuances of financial planning and money management from the comfort of your home. It is will enhance your financial knowledge and help you to make better financial plans for your family's financial future."

Here are some benefits that financial literacy offers you:

1. Financial literacy is critical because it equips you with the knowledge and skills you need to manage money effectively. It's one thing that will impact almost every aspect of your life. Financial literacy is the ability to make informed financial decisions and helps you safeguard your and your family's financial future.

2. Financial literacy has traditionally contributed to manage the income, save and invest wisely and avoid any unworthy financial decisions. As we saw in the above mentioned case, my aunt Ruhi was unaware about the health insurance and was considering a personal loan, which would have created a debt burden.

3. In today's world of uncertainties, it is important to be financially literate and to have the financial awareness so you do not fall prey to any financial phishing trap. Having basic knowledge of banking transactions and being tech-savvy is not enough, you must empower yourself with the weapon of financial knowledge.

4. Financial literacy will assist you in financial planning process, making those emergencies and unexpected events much easier to handle when they come your way. It can safeguard you and minimise the impact of financial hardship.

5. To survive any unforeseeable event and unprecedented situation, you need a robust financial plan and informed decision-making skill. You could attain this if you are empowered with financial know-how. The most significant element to prepare for the unexpected life event is to build an emergency fund. Financial literacy can assist you in building a contingency plan to better handle the tides of uncertainty.

You see, financial knowledge is a basic life skill that has a direct impact on your and your family's financial well-being. The factors such as, budgeting, saving regularly, spending wisely, investing and managing debt are pillars of financial planning. Financial literacy will help you understand the finer nuances of financial planning to be well prepared for life.

PS: PersonalFN understands that not everyone holds the adequacy of financial knowledge. Here we encourage you to gain and enhance your financial knowledge and become a 'Financial Guardian'. You will understand the financial planning elements to guide your family and secure them through these challenging times.

And in case you are wondering how to become that financial guardian for your family, PersonalFN's latest special initiative, the "Certified Family Guardian" offers you an exclusive opportunity to learn the finer nuances of money management.

​Organised into eight modules with 24 extensive videos, the "Certified Family Guardian" will help you with all the relevant tools and learning modules needed to get better at money management. It also offers a host of other benefits to help you make informed investment decisions. Read here for complete details.

So, if you wish to improve your financial knowledge and be prepared for any unforeseeable life event, enrol to "Certified Family Guardian" course today!

Warm Regards,
Mitali Dhoke
Jr. Research Analyst

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds