The lesson that scrutinized us in the year 2020 was the financial crisis. Even wealthy individuals face risks with jobs and savings. Financial decision is part of life when handling savings and investment. The income group and education of the individual are the factors that educate about personal finances. From an education perspective, how the professional courses CA and CMA help in understanding the finances? Let me, deep-dive, into the topic from an Indian perspective.
Benefits of financial literacy
• For chartered accountants the knowledge about financial management aid for understanding the resource allocation.
• From the management information system chartered accountants get knowledge about the financial resources.
• He takes care of the budgeting system.
• He uses effective measures for capital management
• He takes care of the planning of work and delegation of authority.
• The chartered accountant provides consultation in joint ventures, taxation, and collaborations.
• He analysis the new projects and prepares the feasibility report with knowledge about finance.
• He participates in the primary decisions of a company like pricing decisions, product decisions, and government-related matters.
• When doing investment for the company he offers advice about securities.
Financial literacy from CA and CMA course
Though Chartered accountancy students learn about corporate finance, personal finance is also part of education. The subject like budgeting, borrowing, credit management, taxation, investment, and cost management seems to be corporate-related but it has its wings in the personal investment plans. For corporate-level budget revenue, sales, fixed costs, debt service, variable costs, fluctuations, adjustments, and tracking the progress are essential. Investments need to be in the form of passives and actives. For medium-term and small-term investment having a plan is good. So, the cost management and taxation knowledge enhance the personal finance knowledge to the students.
Financial literacy plays a major role in borrowing plans. Time value of money and loan structure is the factors for planning the borrowings. By increasing financial literacy the long-term stress about savings and investment gets reduced. A credit score is a value for understanding the money on interest. Planning the interest helps in saving money. Financial product with banks provides the knowledge about the cost management and economical condition. So, Knowledge about corporate finance helps for planning personal finance.
The percentage of financial literacy in emerging countries and developed countries stand at seventy percent, sixty percent, and thirty percent. As per the Global financial excellence center report, only 24 percentage of the Indian adult population have financial literacy. One of the reports from RBI states that 42.9 percent of the population borrows money for running small-scale business and personal reasons. They take a loan from informal resources. This increases the interest charges on the loan. So, financial literacy is an essential skill to improve the standard of living and incorporate good plans. There are short-term courses for financial literacy which interest the learners.
The non-profit organization in America taught the American schools about financial literacy in the year 2000. April month has been declared as the financial literacy month by America. The ultimate goal of declaring this month as financial literacy month is to understand the basic concepts of finance. In times of pandemic, books are the best friends. 23rd April is world book day. So, the pandemic time is for reading good books and learning more about the fundamentals. This reduces the stress and boosts the confidence of the readers. Financial literacy aids for personal decisions and big financial decisions. Professional courses like CA, CMA, and ACS provide finance education which is the fundamental knowledge to promote the economy.