Citizens' Issues
Financial literacy for children through schools, colleges

Authorities need to outsource by adequately funding financial education and financial literacy process to genuine non-partisan entities with established track record

There is an urgent need to bring about financial education into secondary schools advancing upto college levels by enlightening the lay aam janata who are confused with the finance mumbo-jumbo brandished by experts.

Financial education on various types of bank accounts has to begin at the standards VII to XII by adopting a ‘Financial Fitness Camp’ approach or as project work forming part of extra-curricular activities.

The only way to impart financial education to them at an early age the school level is to pass through their own bank accounts all pocket money incomes and spends. This can act as the baby steps at inculcating the ABCs or basics of rewards of savings and time value of money by taking the form of opening and operating minors’ savings bank accounts for school kids. Into this stand-alone account, parents and kids can deposit their pocket money savings. It can go a long way in the children acquainting themselves with basic banking transactions of deposits of money, withdrawals, payments, the interest earned. They will also monitor their balance from time to time to enable them to take better spending and saving decisions and possibly help bring about a change for the better, with greater financial education for kids from all streams, not necessarily only commerce or economics.

The parents should also be encouraged to deposit school fees and all related expenses like uniforms and books that can be paid out by the parent issuing cheques from the kids’ account. The college years can impart practical studies or internships to understand basic concepts of finance beginning with better money management such as evaluation of risks and rewards of investing, returns thereon, effects of leverage and taxes, financial planning, asset allocation, various insurance and mutual fund products.

The college years can impart practical studies or internships to understand basic concepts of finance, with better money management such as evaluation of risks and rewards of investing, returns thereon, effects of leverage and taxes, financial planning, asset allocation, various insurance and mutual fund products.

In order to boost banking confidence levels in the children, instead of parent/ guardian alone signing the cheques, the RBI should permit children to sign along with parent/ guardian countersigning as is the procedure adopted for dual signature accounts. An upper limit of Rs2,500 at a time could be imposed.

HDFC Bank seeks to target the “parent/ guardian” segment through potential investment rather than pure deposit account positioning, because the current RBI norms do not permit persons below 18 years to operate accounts and only the parent/ guardian is entitled to sign cheques or withdrawal slips.  It aims at appealing to parents to visualise bank accounts as alternate and diverse avenues for investing for the child’s future by helping them maximise savings and returns. Children between the ages of 7-18 years are provided with free personalised cheque books and ATM debit cards with limits of Rs2,500 for purchases and cash withdrawals. Additionally, Free Education Insurance cover of Rs1 lakh in the event of death of the parent/guardian, free standing instructions to transfer upto Rs1,000 to their Kid’s Advantage Accounts, automatic sweep-out when savings balances exceed Rs25,000 and systemic investments in mutual funds, are provided.

Unlike the West, where their teenagers are financially on their own very fast, Indian children are overly sheltered by doting parents. They do not seem to realise the hardships and travails the parents undergo to bring them up. Instead of learning how to fund their education, Indian children expect their parents not only to fund their college education (both undergraduate and post-graduate) but also their marriages and homes too! Not to mention the demands for designer clothes, watches, gizmos like i-pads and high-end mobiles, bikes and foreign travel even while in school and college. They are known to dip into parents retirement funds and don’t hesitate to dump them into retirement homes.

Ideally, parental hand-holding support to our kids should not extend beyond providing their offsprings basic graduation qualification and insist that all spends thereafter should necessarily be self-financed, including post-graduate studies as well as marriage expenses. Nothing whatsoever, from the parental retirement kitty that ultimately goes to them after both the parents are no more and never before when alive.

For the girl child the RBI can better direct the banks to put across to the average Indian women homemakers and their daughters the need to save and not hanker after acquisition of more and more gold.

Banks rarely advise the immense benefits of opening an ‘Either/Number One’ or ‘Survivor’ instead of a single name and the need for both the parents and not only one as guardians for minor children. Similarly, the need for nominations is not adequately emphasised as being an inbuilt ease for transmission, even without a Will in the event of the passing away of the account holder. The process of opening of bank accounts begins with mandatory KYC (know your customer) compliance that essentially means providing proof of residence and identity. Instead, it is demanded so crudely that it appears to be more an exercise in the nature of “Kick Your Customer”.

Our financial regulators—SEBI, RBI, IRDA, and Ministry for Corporate Affairs and stock exchanges—are known to sitting pretty on sizable kitty statutorily and specifically earmarked for spends on Investor Education and Protection. SEBI mandates that fund houses apply 0.02% of their assets on investor education. The NSE has an ongoing programme aimed at teaching 2,000 Tamil Nadu schools. kids the basics of money management. BSE has been sponsoring a TV Reality show Sensex ka Sultan, Birla Sun Life MF has a skit on why MFs take time to deliver. On the face of it both appear inane as they don’t get across to effectively communicate the right information fast enough to educate even an average middle class saver/ investor, let alone any aam sheheri insaan,  penetrating the interiors. Nothing like an Amul Ad that passes a crisp sandesh at a glance across the board.

Authorities need to outsource by adequately funding the education process to genuine non-partisan entities with established track like the Moneylife Foundation to conduct programmes/ workshops/ talks on the merits and demerits of products and schemes, their costs and returns, the hidden catches, the rights and remedies for defaults without promoting any entity or product in particular.

Promoting financial education and financial literacy can help greater good in the society by providing the middle classes (not that our ultra-high networth are great investors – they are known to lose a lot more money and yet they are none the wiser. This is the subject of another of my write-ups) with a better understanding of finance, banking, investments, insurance and to guard against unscrupulous promoters on the look out for financial scams.

 (Nagesh Kini is a Mumbai-based chartered accountant turned activist.)



Sukanya Rao

3 years ago



3 years ago

It must be made part of the school curriculam or atleast projects related to MONEY must be made compulsary with adequate weigtage. Just giving free GYAN will not work. Financial litrecy in this uncertain environment with no job security/social security is a must.


3 years ago

Parents must be literate.

Parents make the best teachers.

Sumeet R Nayak

3 years ago

This is already happening. I work in this area and educate college students on topics such as the basics of the capital markets, mutual funds and the need and importance of financial planning and products available etc


nagesh kini

In Reply to Sumeet R Nayak 3 years ago

What is your sucess rate and the responses from schools esp. Bombay Scottish? I've nteracted with many more colleges too!

West Bengal resolution asks Centre to de-link Aadhaar from DBT

According to the resolution, the decision of the Centre to link Aadhaar with LPG subsidy through DBT scheme would put the common people into tremendous hardship as 85% people in the state do not have the UID number

The West Bengal Assembly has passed a resolution on Aadhaar or the unique identification (UID) number asking the union government to immediately withdraw the decision to link the UID with direct benefit transfer (DBT) scheme.


The resolution, moved by Parliamentary Affairs Minister Partha Chatterjee, mentioned that only 15% people from West Bengal had received the Aadhaar numbers.


In such a scenario, 85% of the people would not be able to get nine subsidised LPG cylinders as the Centre had linked the Aadhaar to the direct cash transfer to the respective bank accounts, he said.


According to the resolution, the decision of the Centre would put the common people into tremendous hardship.


Leader of the Opposition and CPI(M) member Surya Kanta Mishra supported the resolution moved by the ruling party, saying a lot of issues relating to Aadhaar were still unresolved.


Mishra said that the Centre legally cannot make biometric enrolment mandatory and that the entire process was unscientific as there was a scope for margin of error to the extent of 20%.


For medicare drug plans, the high cost of doing nothing

There's a steep price for doing nothing when it comes time for open enrollment for Medicare prescription drug plans

My Thanksgiving ritual each year consists of heaps of turkey, corn casserole and apple pie — as well as quiet time devoted to helping relatives choose Medicare prescription drug plans for the following year.

Most people partake in similar gorging, but not enough spend the time to compare health plans for their relatives. My experience this past weekend is a particularly instructive example of how costly it can be to do nothing.

With open enrollment for 2014 drawing to a close this Saturday, there’s little time for delay. (The process of picking a drug plan in Medicare is totally different from using, the federal health insurance exchange for people under age 65 who are not in Medicare.)

Unlike Medicare’s hospital and doctor benefits, which are managed by the federal government, seniors and disabled people needing drug coverage must choose a subsidized, privately run plan under contract with Medicare. The 36 million enrollees in the program usually have dozens of choices that offer an array of monthly premiums, deductibles and copayments. The plans have different preferred drugs and different requirements for prior approval for expensive generics.

Depending on the drugs each person takes, some plans are much cheaper than others.

Sounds good so far, but there’s a giant catch: Once a person signs up for a plan, his or her enrollment continues from year to year if the person does nothing — even if the plan raises its prices and tightens its requirements. It’s up to enrollees to determine if there’s a better choice, and they can switch plans once a year (during open enrollment).

Consider my in-laws, who live near Dallas.

Last year, I helped them pick a pretty awesome plan that cost each of them $31.10 per month. It has no drug deductible, meaning they didn’t have to pay out of their pockets before their drug coverage began. And generic drugs cost them nothing. Both only take generic drugs — several of them, mind you — and their annual drug costs were less than $375.

But if they had chosen to stay with their plan for next year, prices would have exploded. Their monthly premium would have increased to $47.10 and they would have had drug co-pays of at least $3 per prescription. When you add it all up, my mother-in-law’s annual costs would have more than tripled, to $1,146, and my father-in-law’s would have increased to $1,086.

That’s a steep price for doing nothing.

By shopping around, my father-in-law was able to select a plan that will cost him $415 (assuming his drugs remain the same.) My mother-in-law’s costs will increase to $691. Even though both will see their costs rise, by changing their plans, they cut their tab in half from what it would have been.

Comparison shopping sounds like a no-brainer, but for many reasons, it’s not. It is time consuming and eye glazing even for a health-care journalist to enter in drugs and review the resulting options. A study commissioned by the Kaiser Family Foundation in October found that only 13 percent of Part D enrollees, on average, switched plans each year between 2006 and 2010. Seven out of 10 people continuously enrolled in plans from 2006 to 2010 never switched.

(The analysis only looked at stand-alone drug plans, not Medicare Advantage plans in which drugs are offered in HMOs. It also excluded low-income beneficiaries, whose costs are heavily subsidized.)

One study found that 72 percent of enrollees had never changed Medicare drug plans.

“Only a small fraction of enrollees, however, are enrolled in the lowest-cost Part D plan available to them, based on the specific drugs they take,” the report said. “Therefore, many Part D enrollees incur higher out-of-pocket costs than would be the case with a different plan selection.”

“Part D enrollees often have difficulty with the plan selection process and find the decision-making complicated, especially because of the large number of available plans.”

What the study found, essentially, is that older people and the disabled may be lulled in by lower monthly premiums, only to find that their actual drug prices are much higher.

So why don’t people switch more regularly? The authors offer a few theories:

In one view, enrollment stability could be a sign of enrollees’ satisfaction with their plans. Another view is that beneficiaries avoid “rocking the boat,” by staying in their current plans, preferring the status quo (even at a higher cost) over the unknowns of a new plan. Alternatively, the low rate of switching plans could indicate that Medicare beneficiaries are not fully engaged in the Part D program’s choice-based system and that the task of reviewing and comparing plans in the face of many different options may be too difficult or may not seem worth the effort. This view is supported by some qualitative evidence from polls and focus groups, where beneficiaries have reported that they would prefer less choice and a simpler system.

Based on my experience helping my family members, I find the last explanation the most plausible.

Either way, whether you are a Medicare enrollee or you are friends or relatives with one, compare options. Open enrollment for 2014 ends Saturday, Dec. 7.

Plenty of help is available from Medicare and others. Here’s one place to start:


Editor’s Note: This post is adapted from Ornstein’s Healthy buzz blog. Have you tried signing up for health care coverage through the new exchanges? Help us cover the Affordable Care Act by sharing your insurance story.




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