"The art is not in making money, but in keeping it.", says an old proverb. That's precisely why a working knowledge of personal finance concepts is important for each one of us. What's the point of making money, only to fritter it away by following incorrect investment practices?
Each year, an innumerable quantum of investor wealth in India is lost due to emotional investment decisions or poorly researched purchases of investment products that have high embedded costs, high exit penalties, or low potential for wealth creation.
A Capital One study conducted among high schoolers in the US in 2010 indicated that only 45 per cent of graduating high school seniors are 'ready to manage their money'. I suspect the number to be even lower among graduating Indian high schoolers who, spectacular grades notwithstanding, seem to possess a below average working knowledge of personal finance concepts. That's quite possibly where the seeds of money management failure are sown in the first place.
Given the malleability of school children, it would make a lot of sense to imbue them with sound financial habits early on in life. Perhaps recognizing this, the NISM (National Institute of Securities Markets), with the combined support of all four financial regulators in India (RBI, SEBI, PFRDA and IRDAI) set up the NCFE (National Centre for Financial Education) in 2013, with the stated aim of promoting financial literacy and awareness in the country.
The NCFE has recently announced the NFLAT 2016-17 (National Financial Literacy Aptitude Test) for school kids from standards VI to X. (View the official circular here: http://bit.ly/2fuwaBk). Before your child can appear for the test, his or her school needs to enrol themselves before 22nd November by visiting this link: http://www.ncfeindia.org/nflat. As a responsible parent, it's your duty to make sure they do so!
Prima facie, the test curriculum appears well structured - covering the following topics: Money Matters- Smart Goals and Financial Analysis, Budgeting: Balancing the Means and the Ends, understanding insurance and risk management, Understanding Investments, Basics of Banking, Introduction to Stocks and Bonds, Investments: The wider Spectrum, Beyond Savings: Borrowing and Retirement as a financial goal. All these are highly relevant personal finance topics. Furthermore, two tiers have been created (NFLAT and NFLAT Jr.) with varying difficulty levels.
To promote a competitive spirit, cash prizes as well as white goods are there for the taking, as are medals and shields for the top performers. School level rounds will be followed by Regional and National level rounds.
Personally, I think this is a great initiative. Admittedly, a 60-minute examination is likely to be inadequate to prepare a graduating schoolkid to invest smartly. However; it is at the very least, a vital first step in the direction of making wiser financial decisions. You'll be doing your children a big favour by encouraging them to enrol for and diligently prepare for this test. Get your child's school and your child to enrol for the NFLAT today; who knows, they might just end up teaching you a thing or two about investing!
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