Need for Financial Literacy

Challenge

Financial literacy has become a major point of concern among first time earners, due to the rising  costs of living, increased indebtedness, and unstable job market. Many individuals lack the  knowledge needed to make informed financial decisions, and are often faced with complex financial  situations. Experts’ opinion is that low financial literacy is a potential liability to the whole nation. As  a faculty of finance department in our university, our challenge was to educate the need of financial  literacy to the university students.

Selection

The design thinking tool we have selected for this is mind map. Using mind map, we can collect data  from their current investments and expenses, then categorize them based on their commonality. It’s  important to realize that the students are from different ethnic, financial backgrounds, with/without  financial knowledge, and to keep the questions generic. Also, main goal of this activity is to bring  awareness on financial literacy among the students and not give them a plan to follow.

Application

Considering the available data on an average individual’s investments and expenses, we have  designed the questions, largely based on the current spending habits, credit card usage, loans,  savings and investments.

Students were asked to write the expenses in pink sticky notes and investments/savings in yellow  sticky notes and sticked on the board based on investments, savings and expenses; and are also  categorized based on wants and needs. Needs are the expenses that are essential for living like  groceries, electricity, housing, insurance. Wants are the expenses that help you live more  comfortably and to maintain social status; for example, branded goods, mochas in coffee houses,  travel, entertainment, etc.

Insights

From the board, it is clearly visible that there were more pink notes than yellow. We learnt that  students are spending way more on entertainment, branded dresses and electronics, etc than on  savings.

For example, a student had mentioned he had taken the Annual Gym membership during the new  year sale but have realized he has not gone more than 10 days by the end of March. Another student  mentioned that she subscribes for Netflix every month for last 2 years but not using it regularly.

It was an eye opener for many to see how they have been a defaulter of credit card payments at  least once every 6 months. Also, many have admitted that their average internet charges are higher  than their medical insurance.

Approach

From the data collected, it is evident that the students need to be aware of the financial decisions  they make and keep tabs on the expenses before they start earning. We need to educate the  students on understanding their earnings, healthy spending habits, saving skills and most  importantly investing wisely and informed borrowing.


Need for Financial Literacy Challenge Financial literacy has become a major point of concern among first time earners , due to the rising costs of living , increased indebtedness , and unstable job market . Many individuals lack the knowledge needed to make informed financial decisions , and are often faced with complex financial situations . Experts ’ opinion is that low financial literacy is a potential liability to the whole nation . As a faculty of finance department in our university , our challenge was to educate the need of financial literacy to the university students . Selection The design thinking tool we have selected for this is mind map . Using mind map , we can collect data from their current investments and expenses , then categorize them based on their commonality . It ’s important to realize that the students are from different ethnic , financial backgrounds , with / without financial knowledge , and to keep the questions generic . Also , main goal of this activity is to bring awareness on financial literacy among the students and not give them a plan to follow . Application Considering the available data on an average individual ’s investments and expenses , we have designed the questions , largely based on the current spending habits , credit card usage , loans , savings and investments . Students were asked to write the expenses in pink sticky notes and investments / savings in yellow sticky notes and sticked on the board based on investments , savings and expenses ; and are also categorized based on wants and needs . Needs are the expenses that are essential for living like groceries , electricity , housing , insurance . Wants are the expenses that help you live more comfortably and to maintain social status ; for example , branded goods , mochas in coffee houses , travel , entertainment , etc . Insights From the board , it is clearly visible that there were more pink notes than yellow . We learnt that students are spending way more on entertainment , branded dresses and electronics , etc than on savings . For example , a student had mentioned he had taken the Annual Gym membership during the new year sale but have realized he has not gone more than 10 days by the end of March . Another student mentioned that she subscribes for Netflix every month for last 2 years but not using it regularly . It was an eye opener for many to see how they have been a defaulter of credit card payments at least once every 6 months . Also , many have admitted that their average internet charges are higher than their medical insurance . Approach From the data collected , it is evident that the students need to be aware of the financial decisions they make and keep tabs on the expenses before they start earning . We need to educate the students on understanding their earnings , healthy spending habits , saving skills and most importantly investing wisely and informed borrowing .