HYDERABAD: A majority of the youth in the twin cities of Hyderabad and Secunderabad are not capable of managing their finances, points out a study published recently on financial literacy among youth in the twin cities. The study also highlights the crucial role played by parents in inculcating good financial management habits among young adults. The study, conducted on 425 young adults aged between 20 and 28 years and studying in various colleges, found that a majority of them do not consider maintaining financial records, savings and investment planning to be important.
The participants were asked to answer 23 questions on financial literacy including general financial knowledge, knowledge of savings and borrowings, insurance and investment planning. Most of them could not provide correct answer to even half of the questions intended to test their financial literacy. Most of the questions had only 40-50 per cent participants answering correctly. Less than 10 per cent of the young adults could correctly answer questions related to health insurance, retirement benefits, early investment and return on mutual fund investment.
The questions included concepts of net-worth, overdraft, liquid assets, leasing, lending, credit-worthiness, longterm savings, general insurance, vehicle insurance, life insurance, on-stock market investment, mutual fund investment etc. The study was conducted by Mousumi Singha Mahapatra, a PhD scholar at NITDurgapur, along with members of the faculties of economics and finance, BITS-Pilani and Institute of Public Enterprise here. The participants were also asked to answer questions on socio-demographic characteristics like age, gender, income, place of upbringing and qualification.
The study found that parents play an important role in ensuring good financial management practices among young adults. The study revealed that these young adults consider their parents as role models when it comes to financial planning and depend on their judgement rather than learning about finances themselves. It was also found that young adults whose family income is high have more knowledge of financial management but did not find any overall impact of education levels of parents and place of upbringing on the knowledge of young adults on saving money. Girls were 0.5 times less financially literate than boys. Also, financial literacy was less among science and technology students, the study said.