Things No One Tells You About Financial Literacy
These days, I keep hearing the term financial literacy thrown around—usually linked to SIPs, mutual funds, insurance plans, or the latest trending product.
Recently, I was reviewing the portfolio of a prospect who said she had been investing in equities for quite some time and therefore considered herself financially literate. Fair enough. But as I dug deeper, I noticed multiple schemes with overlapping allocations—and no clarity on why she had bought them, how they served her goals, or what she was supposed to do next.
That conversation stayed with me. It made me wonder—what exactly are we missing in our understanding of financial literacy, especially now that it’s gaining popularity along with market growth? Is it only about investments and chasing high returns… or is there more to it?
Financial literacy isn’t about ticking boxes or collecting products. It’s about understanding why you’re investing, how it aligns with your life, and when to seek help.
Here are a few thoughts that explore what true financial literacy really means, which also stresses its importance.
Financial Literacy and its importance for you
- Financial literacy is not just about investing—it’s also about managing debt, cash flow, and decisions.
- You’re financially literate even if you’ve never done a SIP—what matters is whether you know what suits your goals.
- A financially literate person knows when to take advice and whom to take advice from, and more importantly, whom not to take advice from. (Read: MFDs Vs. RIAs)
- It’s not just about buying equity. It’s about knowing when to exit, how much to hold, and why you’re in it. (Read: What is Equity?)
- Being financially literate means knowing that “no decision” is also a decision, with consequences.
- Financial literacy is not mastering products, but understanding purpose.
- Knowing how much insurance you need is also financial literacy.
- It’s not just about growing wealth—it’s also about protecting and distributing it wisely. (Read: Intestate succession in India)
- Financial literacy is not reacting to headlines, but staying rooted in your own life plan.
- Financial literacy means knowing when not to follow the crowd.
- It’s not just about tracking markets—it’s about tracking your own progress.
- Financial literacy includes understanding your emotions around money.
- Sometimes, staying invested is smart. Other times, stepping back is wiser. Financial literacy helps you know the difference.
- Financial literacy is choosing clarity over complexity. Simpler plans often work better.
- It is about knowing when you need professional help, and not waiting until mistakes cost you.
- It’s realizing that time is more valuable than money, because you can’t earn time back.
- Financial literacy is not about knowing every product—MFs, SIPs, PPFs, NPS—it’s about choosing what aligns with your life goals.
- It’s not about DIY investing. It’s about knowing when DIY stops working. (Read – The Distracted Investor)
- Financial literacy is understanding that risk is personal, and so is planning.
- It’s about creating a financial system that lets you sleep peacefully, not chase returns endlessly.
- Financial literacy is knowing that more information doesn’t mean better decisions. Clarity matters more than complexity.
- It’s realizing that market returns matter, but your life returns matter more.
- Financial literacy means knowing your money has a job to serve your life, not the other way around.
- It’s about balancing YOLO and FOMO—with thoughtful planning, not impulse or fear.
- It’s about asking: “What am I solving for?”—not “What’s trending right now?”
Remember, Financial literacy is not a milestone. It’s a mindset. A practice. A habit.
What do you think? Do add your thoughts in the comments section
