Financial Literacy and Livelihood Revival: Learnings From the Fellowship

Financial Literacy Concept Illustration

Since working in the intervention of livelihoods for the previous eight months and observing trends within the same, one thing I’ve noticed is that there is a severe lack of emphasis placed on acquiring personal financial literacy that has been passed down to the beneficiaries.

We’ve mostly been focusing on empowerment and livelihood revival through various socio-cultural lenses. Even though there are ongoing discussions about how to use money to run a business and generate profits, we often underestimate the main topic: How to use income to secure a healthy financial future.

During discussions, we frequently overlook the importance of financial literacy in achieving an individual’s ultimate goal of empowerment and self-sufficiency. While we work to generate income and restore livelihoods, it is critical to address the essential need for having a conversation about how to manage one’s finances for a healthy financial future and prepare for a financial emergency.

People in India usually learn about finances through the financial practices of their families. We’ve seen various trends in the financial knowledge gained by people from distinct financial situations, which often determines the financial practices one might continue in their life since this knowledge is mostly limited to what they’ve seen at home. Even so, this trend is changing now that most information is available on the internet, but the question remains: what about the rest of the population, which is segmented by the digital divide and does not have access to the internet?

Financial literacy and human development are inextricably linked; an individual can never achieve true development/empowerment unless they have adequate money to support themselves and their dependents.

So, what is financial literacy?

In simple terms, financial literacy refers to the ability to comprehend and apply various financial skills, such as personal financial management, budgeting, and investing.

In India, marginalized and underrepresented groups are frequently perceived as lacking access to an inclusive environment to have financial conversations. As a result, it is our responsibility as a society to create a space for such empowering conversations to take place and to include everyone in order for everybody to grow together!

Towards the solution: Different financial resources are readily available online for anyone to begin learning the fundamentals of financial literacy. However, it is necessary to mention a few adequate points that must be followed thoroughly in order to advance one’s financial journey, some of which are as follows-:

Creating a budget- It is important to know the amount of cash coming through every month as salary, gift, or allowance. Keeping a track of the amount of money coming in helps you to have a basic idea about how much money you can use monthly and yearly for your and your dependents’ needs.

After having a clear understanding of the monthly incoming money, it’ll help you to create a budget that will include all the necessities that need to be taken care of every month (this will provide you with an idea of how much money is needed for the household and personal needs).

Following the 50/30/20 rule- 50/30/20 rule is the financial mantra that needs to be followed by every individual for their financial well-being, even though a little bit of tweaking of the rule is also allowed according to an individual’s need.

a pie chart depicting effective allocation of monthly income, with about 50% allocated for needs, 30% for wants and 20% for savings.
Image Reference:

Under the 50/30/20 rule, 50% of the monthly income should be allocated for the needs of the individual and their dependents, this includes paying rent, bills, dependents’ school fees, travel costs, etc. 30% can be allocated to wants, which consists of leisure activities such as going out, vacationing, shopping, etc. And the last 20% should be saved. Savings can include putting the money into a retirement account, investing, creating an emergency fund, saving money in a high-yield savings account, etc. ( Places to save are decided according to the risk tolerance of the individual, but 20% is an ideal percentage of the amount that needs to be saved)

For example, my income is Rs 100. 50 Rs of my income will go to my needs, 30 Rs for my wants and leisure activities, and 20 Rs strictly to my savings account and investments.

Emergency fund- Most of us are an emergency behind to be in various financial debts. Thus, it is important to save money for a rainy day (if an emergency comes up). Financial experts suggest that one should save 3-6 months’ worth of monthly budget money. Since we talked about how to create a budget earlier, it is important to note that an individual is required to save at least three times more than what their monthly budget looks like.

For example, if my monthly budget is 1000 Rs, I’ll have to save a minimum of 3000 Rs for my emergency fund.

Creating an emergency fund will protect you from any unexpected incident that might come up such as losing your job, losing your financial provider, or anything that might happen which can be unexpected. This is a way to protect you and your dependents from a financial debt crisis in case any emergency comes up.

Even though I recognize that the above points/suggestions will take time and patience to develop as a practice, they will undoubtedly help an individual take their first step toward creating a financially secure future for themselves.

Conversations during the fellowship fieldwork

AIF Fellow, Amana Parveen during one of her field visits to her Host Organization's Member Organization Maya Organics in Karnataka along with the organization members.
AIF Fellow, Amana Parveen during one of her field visits to her Host Organization’s Member Organization Maya Organics in Karnataka along with the organization members.

Creating a financial literacy dialogue among people, particularly underrepresented groups, will assist them in having conversations among themselves and their households, which will eventually assist them in realizing the need to think about their financial future and how to protect it. It will also enable them to improve their socioeconomic position in society, if not entirely, and it will certainly contribute to the cause.

One such example of economic empowerment for women is an organization called Maya Organics in the toy town called Chinnapatna in Karnataka, which is a member organization of my Host Organization Fair Trade Forum-India. During my field visits, one important conversation I had with the women artisans and organization heads was about the economic empowerment of the communities and how the organizations are finding ways to contribute to the same.

During my conversations with the project implementing team and organization heads of the organization, I realized how the organization is contributing to enhancing the financial literacy of its artisans by establishing partnerships with firms that are providing masterclasses and workshops on financial management for personal and professional use along with providing insurance and empowering the women artisans to start Self Help Groups to encourage saving money as a concept. The organization often shares financial empowerment and literacy videos on YouTube which are educational to their artisans while making sure to keep them up to date with the financial laws that exist in the country for their empowerment.

This experience opened my eyes to the importance of having such initial and detailed conversations regarding financial literacy for empowerment, especially when you’re working towards the revival of livelihoods. After this, I made it a point to educate other organizations I got a chance to visit drawing inspiration from Maya Organics to facilitate financial education in their communities.

I deeply believe it is important for us to learn from organizations like Maya Organics and Fair Trade Forum-India in including personal finance as a facilitation module for the benefit of the beneficiary communities while working on the livelihoods revival of the communities to increase the level of impact and making the communities independent when it comes to making personal financial decisions. It is time for us to advocate for financial inclusion and guide people in need with the resources that are available to us as individuals and organizations for creating a maximum impact while implementing our projects for social change.

Ending the blog with an important message to carry forward as social changemakers: Together we rise!

Note:- I am not a registered financial advisor. These are the few points I’ve been implementing in my life and have seen people starting their financial journey from scratch do so.


The Importance of Financial Literacy for Women

Here’s To Embracing Financial Literacy In 2021

Why Do Women Hesitate Handling Finances?


Amana hails from Kochi, Kerala. She has developed extensive industry knowledge and academic experience in the social impact sector through her involvement over the last three years. She is a Political Science Hons graduate from the University of Delhi, India. Along with her bachelor's degree, she completed a diploma in Women empowerment and development. She also holds certifications in Human Rights and Legal Literacy. She has worked in a diverse range of impact environments stretching from education, livelihoods, fundraising, relief, communications, corporate engagement, and advocacy. Previously, she has worked on a project named "Let's reach out Kerala", which aimed to offer psychosocial support to guest workers stranded in and outside the state of Kerala, India, during the first phase of the pandemic. After that, she went on to work on a vaccination project to provide Covid-19 vaccines to 200 guest worker families in Delhi-NCR, India. Through her various experiences, Amana acquired considerable skills, such as project management, communications, graphic designing, development of concept notes, collaboration, and research. Amana is a self-motivated and passionate individual who envisions an empathy-driven world.

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