Data | Retired men in cities have most financial literacy: Survey

An RBI survey tested respondents on financial knowledge, diversification skills and the risk-return relationship

In India, retired men, especially those living in urban areas, have the most financial literacy among various comparable cohorts, according to the results of a survey published in the Reserve Bank of India (RBI)’s June 2023 bulletin. In contrast, daily workers/labourers aged 20-29, who are educated up to Class 12, have the lowest levels of financial literacy. This makes them vulnerable to exploitation by moneylenders.

The financial literacy field survey was conducted over 45 days and elicited 584 responses that were initially collated between February 26 and April 14, 2022. The respondents were people who visited the RBI exhibition in Hyderabad. The sample was drawn from various geographical, educational, age, income, and gender backgrounds. The survey was designed to test the financial knowledge, financial behaviour, and financial attitudes of the respondents.

Chart 1 | The chart shows the results of the part of the survey that tested financial knowledge.

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The respondents were asked whether they were aware of the RBI’s Ombudsman Scheme which customers can use to lodge complaints against banks and other financial institutions. The respondents were then assessed on their knowledge of the risk-return relationship. Did they understand that an investment with a high return is likely to be high risk? Did they know that being offered a chance by someone to make a lot of money also meant that they could lose a lot of money? Did they understand that high inflation means that the cost of living is increasing rapidly?

The respondents were also tested on their diversification skills. They were asked whether they were aware that the risk of investing in the stock market gets reduced if they buy a wide range of stocks and shares. Based on the answers, scores were assigned.

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The chart shows that among different occupations, the financial knowledge of retirees stands out, whereas, among various age groups, 50-59 year-olds have the most financial knowledge. Those aged 20-29 have the least financial knowledge followed by those aged over 60. The conclusions when read together hint that those with better financial knowledge retired early.

The chart also shows wide variations across gender. Men have more financial knowledge than women, and those living in metros have more financial knowledge than those living in rural areas. In the charts, the longer the bar, the more the financial literacy.

Chart 2 | The chart shows the results of the part of the survey that score of financial behaviour. 

Next, the survey tested financial behaviour. Were respondents in charge of day-to-day decisions about money? Did their household have a budget? How did they choose the last financial product/service they invested in? They were assessed based on how carefully they considered whether they could afford something. They were also asked whether they sometimes found that their income was not quite high enough to cover their living costs. 

Here too retired persons topped the charts. However, among age groups, those aged 30-39 scored the most and those aged 20-29 the least. Also, married persons’ financial behaviour was far better than single persons. When read together, it shows that financial behaviour changes dramatically immediately after the marriage.

Chart 3 | The chart shows the results of the part of the survey that tested financial attitude

The last part of the survey tested financial attitude. Respondents were asked whether they wanted to live for today and let tomorrow take care of themselves and whether they find it more satisfying to spend money than to save it for the long term. Women scored better than men on this test. Retired people topped the charts again.

Source: Financial literacy in India: insights from a field survey in RBI’s June 2023 bulletin

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