Short Notes: Financial Literacy (COMM103M)
Chapter 1: Introduction to Financial Literacy
- Financial Literacy: Knowing how to manage your money well, including earning, saving, spending,
and investing.
- Need for Financial Literacy: Helps in better money management, avoiding debt, and achieving
financial security.
- Role of Financial Education: Teaches smart financial habits and helps improve your overall
financial well-being.
Chapter 2: Basics of Personal Finance
- Savings: Money kept aside for future needs.
- Investment: Using money to earn more money (e.g., stocks, bonds).
- Borrowing: Taking money as a loan to repay later with interest.
- Income and Expenses: Income is money earned; expenses are money spent.
- Surplus/Deficit: Surplus = Income > Expenses; Deficit = Expenses > Income.
- Assets and Liabilities: Assets are things you own; liabilities are debts you owe.
- Inflation: Rise in prices over time, reducing money's value.
- Time Value of Money: Money today is worth more than the same amount in the future.
- Active Income: Earned by working (e.g., salary).
- Passive Income: Earned without active work (e.g., rent).
Chapter 3: Financial Planning
- Financial Planning: Organizing finances to achieve life goals.
- Steps involved in Financial Planning:
- 1. Assess financial situation.
- 2. Set goals (use SMART: Specific, Measurable, Achievable, Relevant, Time-bound).
- 3. Create a plan.
- 4. Implement the plan.
- 5. Monitor and adjust.
- Three Pillars of Investment: Liquidity (easily accessible), Safety (low risk), Returns (profit).
- Risk and Return: Higher risk can lead to higher returns; lower risk means safer but lower returns.
Chapter 4: Banking Services and Products
- Types of Banks: Commercial, Cooperative, Public, Private, Rural, and Development banks.
- Bank Accounts:
- - Savings Account: For regular saving.
- - Term Deposit: Fixed deposit for a specific time.
- - Current Account: For businesses with frequent transactions.
- - Recurring Deposit: Save monthly for a fixed term.
- - PPF: Long-term savings for tax-free returns.
Chapter 5: Formalities and KYC Norms
- To Open a Bank Account:
- - Fill the form.
- - Submit documents (PAN, address proof).
- - Complete KYC (Know Your Customer).
Chapter 6: Loans and Borrowing
- Types of Loans:
- - Short-Term: Repaid within a year (e.g., personal loans).
- - Medium-Term: Repaid in 1-5 years (e.g., car loans).
- - Long-Term: Repaid in more than 5 years (e.g., home loans).
Chapter 7: Digital Payments
- Cashless Banking: Transactions without cash, using technology.
- e-Banking: Online banking via mobile apps or websites.
- ATM: Withdraw or deposit cash.
- Debit Card: Directly uses your bank money.
- Credit Card: Borrowed money to repay later.
- App-Based Payments: UPI apps like Google Pay, Paytm.
Chapter 8: Banking Complaints and Ombudsman
- Banking Complaints: Issues like failed transactions or wrong charges.
- Banking Ombudsman: A system to resolve complaints free of cost.
