Financial literacy in India - A far off idea

A middle class housewife, was saving small tokens of money everyday from her husband's wallet without his knowledge (or say robbing him knowingly everyday). Her main intention to do so was to have enough contingency fund that can save the lady and her husband in difficult times. Plus, she always dreamt of having extra money in hand to pamper herself during good times as she had a very frugal, minimalist life past couple of years. She never got a chance to think and take care of herself. She always waited for the day to be a girl again, go out and do stuff and buy things she always cherished.

She has now been saving for twelve years without any clues to her husband. She never thought a day will come when all the money lying at home will just vanish in thin air right infront of her eyes.

With government recently announcing ban on (demonetizing) existing 500 / 1000 currency notes currently in use, held by public to curb black money, She was not only shocked but was completely clueless, helpless how to handle the situation. She made a decent amount of money by saving it everyday in her home piggy bank. She was out of ideas how to save her money from the government. 

She could not eat the food next day. She finally decided to tell her husband about the same. Her husband after listening to her story was baffled. Both of them not being so financially educated, instead of helping each other just went into verbal confrontation and worsened the situation. The accusation game started too early than expected. He was blaming her for doing so and not putting the money on timely basis in either Fixed Deposits or Post office schemes (he only knew about these 2 safe schemes wherein people can invest money without any risk).

Poor lady had no clue that her money lying home with every passing year was losing its real value due to inflation. She still held the same importance to every single rupee she saved today as she saved twelve years back.

Because her husband was in such a business wherein he never filed income tax, he had no idea of what should be the plan of action to save the dying money. 

The lady decided to call all her relatives and tell them about the situation. Relatives knowing that she held so much money, said sugar coated things to make her feel better but implicitly wished for tax raids at her home. Now all the relatives started judging her from the money she has stashed at her home. Their perception towards her changed in a jiffy after knowing the amount she held. Most of them could not digest the fact that she had more money than them. She made a big mistake by telling this to others.

Her husband spoke to one of his friend and he asked him to buy gold for that money. The friend mentioned he knew someone who own a jewellery shop and can help him to corner the money. They all decided to meet at jeweller's shop. The shop owner forced them to buy gold at 30 percent above the market price and the poor souls agreed because they knew that this is the only hope for them to save themselves from IT scrutiny. 

They bought gold at 30% above market rate and disposed off all the money by converting it into physical asset. They felt relieved and thanked their well wishers for helping them out. 

The lady started blaming her stars later. She was of the view that it all happened because of her evil act of stealing from her husband's pocket. The lady now was back to square one for 2 reasons: she was again out of contingency fund and now she has lost all the hope (this time forever) of being the girl who can spend and buy anything and everything without much worries someday.

This incident reminded me of the fact that financial literacy is still an unknown thing in our country. Only a very few know the importance of savings and investments. They also had no understanding of the purchasing power of money, risk, diversification, compounded interest and inflation. For them, investments means buying gold or having Fixed deposits and insurance is equivalent to paying heavy premiums to LIC. 

She hasn't been able to come out of the shock till now. She has been blaming herself for all the wrong happenings in her life. I so very much wished she should have further studied and made the right decision instead of having a panic attack and doing things in rush. She not only told everyone in her relation about the kind of money she had, plus, she's left with an overpriced, no hallmark physical asset which has lot of speculation and market volatility. 

Please see below images to understand how you can return 500 / 1000 notes back to the Bank:

#BlackMoney
#AccheDin
#Demonetisation

Source: http://www.bbc.com/news/business-37906742