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Financial Literacy and Entrepreneurship: Backbone of Prosperity

Madhav Nirdosh

How to earn money? How to save money? How to earn a lot of money quickly? This is the topic that most people think about today. Everyone thinks that after earning money, all their problems will be solved. Every facility can be enjoyed after earning money. Being financially literate in a general sense is also how to earn money? How to save money? But another unseen question is – how to use the money properly? Financial literacy is the answer to this question.

Everyone wants to get rich quickly. Everyone likes to make quick money. But money is not earned immediately, having said this, it must be said again that money is something that is earned, it is earned easily. There are bases to earn money. There are ways to recognize money. Using money, saving money and making one to reach tens and tens to hundreds and hundreds to thousands and thousands to millions, this is the roadmap to making money. Financial literacy is the education that teaches the way to understand, contemplate and implement this education.

Enhancing financial awareness and financial education falls under financial literacy. Financial literacy teaches you to understand the importance of money and how to manage it. Financial and social security can be achieved through proper use of money. Financial literacy teaches that unlimited needs can be met with limited resources if money is properly managed. Financial literacy provides the art, skills and knowledge of making a systematic budget, making standards for spending, adopting methods of spending and saving, and making systematic use of limited resources and making the best use of them. Financial literacy is also about developing entrepreneurship skills to generate income through proper use of money. In which banking, insurance and capital markets are a big part.

Part of financial literacy is acquiring a banking education. Opening a bank account, increasing banking access, being active in banking transactions and doing all money transactions only through the banking system will begin to address many deficiencies. This includes income, expenses and savings. If interest is earned from the money deposited in the bank, another person in any place takes the same amount as a loan from the bank and achieves entrepreneurship. If at any time the idea of ​​entrepreneurship is developed, business can be operated by taking out a loan as per requirement in a greater proportion than what is kept in the bank. Acquiring knowledge about banking interest, banking loans, investment and products is financial literacy. After starting all the parts of income or expenses from the banking system, then the banking services, facilities and activities of the bank are known. Know about loans, savings, types of savings, interest rates etc. After knowing these things, the individual develops the ability to deposit money in the bank, withdraw it according to need and adopt the path of entrepreneurship by taking a loan from the banking sector, thus financial literacy is connected with the bank.

Financial literacy for insurance education and security

Insurance education and security is another part of financial literacy. Insurance is a part of all money transactions. Also, banks and insurance are complementary to each other. Insurance is the way to protect the money, just like the bank deals with money. Lifetime wealth can be destroyed by natural calamities such as earthquakes, epidemics, storms, fires, floods, landslides in 30 seconds. Not only the acquired property, but also by taking a loan from the bank or with the amount earned by oneself, any trade, business is operated. Such disasters destroy the business which is the main source of income in a moment. Insurance is the only option to protect it. Insurance helps with the hassle. Provides compensation for damage caused by natural calamities. Insurance completely eliminates the situation of panicking, worrying, and even becoming a mental patient due to lack of risk management. Insurance not only protects property but also protects life. People who cannot afford treatment are linked to hospitals. Makes you aware of health. Not only this, like money kept in the bank, life insurance money also solves big problems. An amount that provides long-term satisfaction to the family. The joy of withdrawing the amount deposited for life insurance in one lump sum is not small at all. In case of death of a family member due to any reason, the amount is realized as compensation. Provides relief to the people left behind. Hence insurance is another area of ​​financial literacy. A person who does not have financial education or understanding cannot understand the importance of insurance. The importance and necessity of insurance is linked to insurance education and insurance education is linked to financial literacy. Recently, insurance facilities have started to be available through banks, so that financial literacy has also worked as a bridge connecting banks and insurance.

Capital Markets in Financial Literacy

People want to use the money they have or the property in their name as an investment. It is not just about having money, if it is not invested in income-generating or productive sectors, financial literacy is incomplete. Why not invest some part in the investments made through a government agency or any organization. Investments for future income, collective investment or the activity of connecting assets with the running economy is included in the capital market. This means that it is not possible to complete any bank, finance, insurance company, hydro, hotel or any other big projects alone. Everyone has a small amount of money. Only by collecting a small amount of money from many people, success can be achieved in the field of big investments. Investing, measuring its market value, buying and selling shares according to the need, etc. are included in the capital market. Hence, financial literacy provides education about capital markets. In another sense, financial education means having knowledge about the capital market. Having access to the capital market and having a good study about the area related to the capital market. Only financially literate people have good knowledge about the capital market.

Recently, the topic of financial inclusion and financial literacy has gained importance and discussion all over the world. Financial access, inclusion and financial literacy are also being discussed in Nepal. Financial inclusion generally means financial services for all. To make this worthwhile, many financial literacy related works have been done by Nepal Rastra Bank, Bima Samiti, Nepal Securities Board and the private sector.

Financial literacy begins with banking and continues through insurance, capital markets and banks. The skills, education and art of activating the process of money management are provided through financial literacy.

Importance of the role of Financial literacy in Development

Development is possible only through financial literacy. The rate of financial literacy in Nepal is very poor. The more developed countries in the world, the more financially literate those countries are. Of course, only countries with more financial literacy are more developed. Development starts with financial literacy. Research, planning, project preparation and investment. Financial literacy only teaches things like getting returns after investment. Financial knowledge leads to financial discipline. Only people with financial education complete the work within the stipulated time limit. Not only this, financial education development is linked to countless areas. How long does it take to complete any plan? How much does it cost to invest? How soon does production begin? What are the safe criteria for that? How much income is received after investment? How many years of income? Financial education is the instrument to measure these things. Financial education is required to plan, schedule and work according to specified standards. Financial discipline is required. Financial legislation is required. Financial literacy is also the basis for measuring the development indicators of any developed country.

In order to strengthen financial management, the scope of financial laws should be strengthened. In particular, the scale of the financial sector or its scope is limited only within the financial institutions in Nepal. Financial means not only banking, insurance and capital markets. Every area where money is handled is connected to financial literacy. Financial discipline is not limited to banks, insurance companies or capital markets. State agencies, road construction, bridge construction, infrastructures, and financial laws in every field are only encouraged to complete the work on time and use the specified goods. The role of financial literacy is important to build a developed society, to be financially strong, to decide development plans and to achieve financial prosperity. While countries like Sweden, Canada, Norway have about 75 percent financial literacy, in Nepal only about 20 percent are financially literate, showing the economy and development of the entire country as a weak indicator.

What to do to increase financial literacy?

Recently, financial access has been reached to some extent as banks and financial institutions have reached most of the local levels. Financial literacy activities have also taken place where financial access has been reached. But in some places financial awareness work has not yet been done. Financial literacy programs can be carried out at the local level of the country, if the local government agencies and the people’s representatives in those agencies can focus on the issue of financial literacy, financial education can be provided everywhere. At the same time, the government should include education related to money management in the school curriculum itself. This shows that financial transactions should be done from the school level itself. And it only leads to entrepreneurship. Every bank can explain about financial literacy through help desks in banks and insurance companies in insurance offices. Although banking access has been reached in some places, financial literacy and awareness campaigns have not reached. As a result, citizens still hesitate to enter the bank.

Recently, the government has also provided various facilities for insurance. The government has given special interest in the concessions given in agricultural insurance, health insurance and other insurance and has advanced various programs. Similarly, the insurance committee also seems to have done various works for various financial literacy. From establishing an insurance training center for insurance education to establishing a provincial level office to make insurance accessible everywhere, work has progressed. The increase in the number of life and non-life insurance companies has made insurance companies competitive in business expansion. Therefore, access to insurance is increasing. Those insurance companies can also conduct insurance awareness campaigns through help desks in the office.

On the other hand, first of all insurance agents should be financially literate. Agents should be able to explain the importance of insurance to citizens. Agents play an important role in expanding the insurance market. Therefore, insurance companies should pay special attention when appointing agents and making them able to explain the importance and need of insurance to the agents from the government level can be another way to increase financial literacy.

The role of technology is important

Recently, banks and financial institutions, insurance companies all seem to have made efforts to provide financial access through the use of technology. In Nepal, the attention of companies has increased in modern banking, modern insurance services. It seems that insurance companies are also providing their services in connection with banks. As a result, it is possible to get insurance related services wherever the bank reaches. Most citizens have access to the Internet. But users may not have good knowledge about technology. In such a case, if training can be conducted to teach the use of technology, the use of technology can be increased. Through which banking, insurance and capital market work can be done at home through technology. Wherever there is internet access, people can access finance through technology.

Business Literacy and Entrepreneurship

Business is work, a job and we need certain skills to do the job. That skill of doing the job can be called business literacy.

(The author is the coordinator of the Banking/Insurance Expo Program and National Financial Awareness Campaign.)