The Relationship Between Age and Income With Financial

Planning – An Exploratory Study

Authors:

1. Leena B. Dam1
Associate Professor
Global Business School and Research Centre, Pune

2. Malti Hotwani
Research Scholar
Dr. D Y Patil Vidyapeeth, Pune

Abstract

Financial Planning is an art with a touch of science to manage one’s own money having the
propensity to accumulate for future and simultaneously meet with ease the daily financial
requirement. Due to diversification of financial services sector individual investors have wide
array of products to invest. Individuals need to be financially literate in order to make realistic
financial plans and decide the best suited investment product where the returns beat inflation and
wealth accumulation is achieved. This study attempts to analyze the relationship between age
and income with financial planning. It also studies whether age and income have a positive
correlation with the choice of investment products. Analysis show that majority of individuals
have set financial goals. But they are unaware of how to meet their future financial goals. Also
investors are not correctly aware of which product to invest in given their age and income
bracket.

Key words
Investment pattern, financial literacy, financial goals, investment portfolio, Individual investor.

JEL Classification: JEL: D

1
Corresponding author: leenadam@gmail.com

Electronic copy available at: https://ssrn.com/abstract=2934855

 The Relationship Between Age and Income With Financial Planning –
An Exploratory Study
‘Most people don’t plan to fail. They fail to plan’. – John L Beckley

I. Introduction:

Financial planning is a comprehensive evaluation of an individual's current pay and future

financial state by using current known variables to predict future income, asset values and
withdrawal plans. Financial literacy or financial education can broadly be defined as 'providing
familiarity with and understanding of financial market products, especially rewards and risks, in
order to make informed choices.2 OECD International Network on Financial Education (INFE)
defines Financial Literacy as ‘A combination of awareness, knowledge, skill, attitude and
behavior necessary to make sound financial decisions and ultimately achieve individual financial
wellbeing.’ It is an art with a touch of science to manage one’s own money having the propensity
to accumulate for future and simultaneously meet with ease the daily financial requirement.

The Indian financial market today is inundated with a wide array of products. An investor now is
spoilt for choice as they are faced with the problem of plenty. Till 1990s Indian economy being
closely guarded, limited variety of financial products were available. The salaried section
typically created wealth and retirement corpus by contributing in Public Provident Fund, Fixed
Deposits and the erstwhile US-64. As a significant proportion of population served in the public
sector, the gratuity amount received on retirement too helped in building up the retirement
corpus. As India makes galloping stride towards an open economy and public sector/government
jobs giving way to contractual private appointments, the need for financial planning becomes a
serious business. Financial planning is a scientific process which aims at building up the wealth
of the investor in a planned and systematic manner.

A typical approach to financial planning involves effective utilization of savings to accumulate

wealth, followed by careful preservation of such wealth against value depreciation and losses,
and finally distribution of wealth at a later stage of one’s life. Such planning reflects an
individuals’ current state of play and how individuals plan to progressively develop and build
their capacity in managing financial needs with respect to credit and cash management, tax

2
RBI Concept paper on ‘Financial Literacy and Counselling Centres’

Electronic copy available at: https://ssrn.com/abstract=2934855

planning, insurance and risk management, investment, as well retirement and estate planning
(Malaysia Financial Planning Council, 2004).

The task of financial planning becomes heavily intricate as all companies allegedly claim highest
return of investment on the principal amount. Today, there are close to 1000 schemes of Mutual
fund and 104 Equity Linked Savings Scheme available for Indian investors. Investing in which
scheme will ensure that the capital is not eroded and returns beat the inflation – is a question that
should hammer every investor. The need, awareness and clarity are the focal points while
considering an investment decision. Even though financial planning is a personal decision
unbiased guidance for the investors is the need of the hour. Else the benefits of young, vibrant,
demographic India would become a heavy baggage for the government when this class of
population enters old age post retirement.

II. Literature Review

Financial literacy and its impact across various demographics have been widely studied in the
developed economies. Olivia et al (2007) study corroborates that financial literacy is important
for an individual to make appropriate short term and long term financial decisions. Young and
old are less financially literate and individuals at the middle of life cycle are comparatively more
financially literate. Also people have high financial literacy when they are working and vice
versa & this is because literacy is provided by the employers at work place. There are four
traditional approaches to financial education – employer based, school based, credit counselling
and community based, all of these approaches have no clear results about their effectiveness
(Gale and Levine, 2010). Postmortem analysis of any financial crisis throws interesting insights
into the level of financial literacy. The 2007-2009 financial crisis highlighted that American
individuals are not equipped to make sound financial decisions, like difficulty of managing
personal debt and student loans because borrowers may not understand the concept of interest
and be able to calculate the true costs of their loans (Lusardi and Mitchell, 2014; Council for
Economic Education, 2011, 2014; NASBE, 2006; Hopley, 2003). There were more foreclosures
suggesting adults may not understand their mortgage terms or how much their loan may be
costing them in interest (Lusardi and Mitchell, 2014). Individual's lack of literacy is a main
reason behind lack of portfolio diversification. Also individual claim to know more about finance
than they actually know (Luigi Guiso and Tullio Jappelli, 2008) . However, young and old are

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more literate than middle aged respondents. Also males are more financially literate than
females. Individuals with high school degrees are less literate as compared to doctorate degree
holders. (Sumit Agarwal, et al, 2015) There is a great significance of financial goals and
objectives in life among individuals but there exist a great gap at an individual’s level that
hinders one from effectively managing the financial affairs. Individuals are hesitant in relying on
the professionals to realize their financial goals (Tan Hui Boon, Hoe Siew Yee and Hung Woan
Ting, 2011). Therefore individuals rely more on friends and relatives who are not associated with
the financial industry for choosing a financial product. (Prof. Sobhesh Kumar Agarwalla, et al,
2012). Several other factors that influence financial decision of individuals when making
financial decisions are parents, prior knowledge, trial and error, fixed income and fear of debt.
(Kimberly A. Brown, 2009). Financial knowledge and planning are positively correlated.
However, very less people calculate how much they need to save for retirement, devise a plan.
Also there is less belief in successful retirement planning and using formal methods such as
retirement calculators, retirement seminars, and financial experts, and less likely to rely on
family/relatives or co-workers. (Annamaria Lusardi and Olivia S. Mitchell, May 2011). Financial
education affects short term financial behaviour for people with low education and income,
means people who need more formal instructions to learn basic short term behaviours. (Jamie
Frances Wagner (2015).

III. Conceptual Framework

Better lifestyle and financial well being is a basic human desire. The growing instability in the
workplace and increasing inflation makes it difficult for individuals to maintain their standard of
living. Therefore it is extremely important to have precise financial objectives and financial plans
at the start of the career. Financial Planning builds on the awareness ‘For the need for Financial
Planning’. Can a person be self motivated to plan for future financial requirement or does the
motivation come from outside? Does not the male clan perceive themselves to be bestowed with
financial planning decision as a birth right? Are people equipped to draw their own plans to meet
financial goals? Does the education system across all academic streams make an individual
competent to prepare their own financial plan? On the basis of the researchers’ interaction with
respondents the answer is an emphatic ‘No’. Definite and logical answer is a far cry.

4
Financial planning is a scientific approach for planning for the future. The art of meaningful
financial goal setting requires threadbare analysis of income and expenses. How many people are
truly provoked to prepare a statement of their income and expenses? Our education system
doesn’t enhance financial proficiency and the need for dependency on financial consultants
increase manifold. The salaried Indian middle class does not look at financial planning as a
serious business.
The financial market is flooded with umpteen products. Reading and interpreting the contents of
a financial product viz mutual funds, Fixed Deposits, Bonds and Company Shares is restricted to
people having knowledge of finance. Can people decide which product suits them
appropriately? It is a partial breather as the market regulator (SEBI) now mandates colour coding
for the Mutual Fund Schemes. At least it gives some respite to people as they can read and
interpret the suitability for own selves.
As the Government allows a deduction of Rs 1,50,000 u/s 80 C of the Income Tax Act, 1961
people are forced to invest in the products listed there to reduce their income tax liability. Here
again the question arises, where and how much to invest? 42 Mutual Fund houses and a mind
boggling 11848 schemes are available, out of which around 100 are ELSS and others Non ELSS
schemes3. It requires precision and comprehension to judge which schemes would be best to
invest.
Many investors erroneously invest in ULIP presuming it to be a Life Insurance Product. By
considering Savings and Life Insurance as synonymous investors dug their own pit. ULIPs levy
high administrative expense ratio in the initial years of the investment tenure. Low life coverage
provided by ULIP further exacerbates the high cost of owning this product. Term insurance
which is a valuable product is a grossly neglected in the portfolio of the investors. Indians are
obsessed with the rate of return on their investment discounting all other parameters for choosing
the investment instrument. As term insurance money is available only in the event of death of the
policy holder, majority of the investors neglect this product and either settle for a low return
ULIP or Life Insurance Endowment plan.
Though, purchasing in a house enables tax deduction, is the individual prudent to make the
buying decision? Can the income match the Equated Monthly Installment outflow effortlessly? If

3
Amfi database

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no, will it better for the individual to rent a place of stay to attenuate the aggregate money spent
for accommodation?
National Savings Certificates, popularly known as NSC, is an Indian Government Savings Bond,
primarily used for small savings and income tax saving investments in India. It is part of the
postal savings system of Indian Postal Service currently offering 8.10% rate of interest. Deposits
qualify for tax deduction u/s 80C but the Interest earned on NSC is taxable under IT Act, 1961.
Similarly for the 5 year tax saving FDs offered by the banks, the deposits only qualify for tax
deduction whereas the interest earned on FDs is fully taxable. The rate of interest offered on
FD/PPF/EPF is meager as they don’t beat inflation. When investors lean towards these products
due to security of investment, to build their corpus the wealth accumulated will not be sufficient
to meet the financial requirements.

Steps in Financial Planning Process

1. Determining the current financial situation

2. Developing financial goals

3. Identifying alternative courses of action

4. Evaluating alternatives

5. Creating and implementing a financial action plan

6. Re-evaluating and revising the plan.

Financial planning is a process of determining one’s current financial situation. Financial goals
that match current financial situation are developed. After the goals are determined various
alternatives are identified and evaluated and finally the most appropriate financial plan is
implemented.

As these are focused process, a financial consultant needs to be hired. Through unprejudiced
consultation, an investor should effectively plan for the financial needs arising in the future. A

6
plan done in the present moment needs to be revisited at regular intervals to check for goal
congruence.

IV. Statement of the problem

Taking a cue from the aforementioned studies a need was felt to study interlink between
financial planning and investment pattern of the salaried individuals. This study focuses on the
investment products chosen as part of financial planning. The paper also attempts to study if the
attributes of age and income has significant association with financial planning and investment
decisions.

V. Objectives of the study

The objectives for the study are:

1. To study the awareness level of Individuals about their financial goals.

2. To analyze the multiple investment avenues available for various categories of investors.

3. To analyze whether financial planning is based on personal choice or professional advice.

4. To examine the effect of age on Financial Planning.

5. To analyze the effect of income on the choice of investment instruments.

VI. Hypothesis

H1: All investors are perfectly aware about their financial goals.

H2: There is no difference in the choice of investment options amongst the various categories of
investors.

H3: Individual investor’s financial planning decision is based on professional advice.

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H4: Individual investor’s financial planning decision is based on advice taken from friends and
family.

VII. Research Design

This study is majorly based on primary sources of data. The data has been collected by the
distribution of close ended questionnaire to 530 respondents (salaried individuals) working both
in IT and Non IT based organizations in Pune. 404 people responded to the questionnaire.
Random sampling technique was followed. 242 (60%) respondents were personally interviewed
in a semi-structured format to draw conclusion on their perception of financial literacy and
financial planning. Questions covered demographic factors i.e. age group, gender, marital status
and yearly income. Questions on financial planning seek to answer the level of awareness,
knowledge, skill, attitude and behaviour of the respondent.
The structured questionnaire used neutrally worded questions and the respondents were asked to
rate on the Likert scale questions number 1 to 9 which captured information on their awareness
and knowledge of Financial Planning. These consist of questions to be answered on a five point
Likert scale viz 5 for Strongly Agree to 1 for Strongly Disagree. For studying the investment
pattern 11 questions were asked on a 5 point Likert scale; the responses ranging from 5 as Most
Preferred to 1 as Least Preferred mode of investment. 404 respondents replied to the
questionnaire which has been analyzed.
Raw data has been analyzed using descriptive statistics and cross tabulation. The one-way
analysis of variance (ANOVA) is used to determine whether there are any significant differences
between the means of four independent groups (age and income) to check the hypothesis and
draw conclusion.

Reliability test of the structured questionnaire

Reliability test is used to measure the internal consistency of Likert questions. In order to
understand whether the questions in this questionnaire all reliably measure the same latent
variable i.e. need for financial planning and investment pattern, Cronbach’s alpha was run. As
shown in Table 1 the Cronbach’s alpha score of 0.841 and 0.758 indicates a high level of internal
consistency.

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Table 1: Reliability Statistics

Parameter Cronbach’s Alpha Number of questions

Financial Planning 0.841 9
Investment Pattern 0.758 11

Table 2: Profile of the Respondents

The demographic characteristics of the respondents are summarized below:
Total responses: 404
Parameters Number of Respondent
(%)

21-30 years 72 (17.8%)

Age group 31-40 years 132 (32.7%)
41-50 years 104 (25.7%)
51 years and above 96 (23.8 %)

Male 216 (53.5%)

Gender Female 188 (46.5%)

Single 72 (17.8 %)
Marital Status Married 332 (82.2%)

Rs 3 to 7 lakhs 104 (25.7 %)

Yearly Income Rs 8 to 15 lakhs 148 (36.6 %)
Rs 16 to 24 lakhs 88 (21.8%)
Rs 25 lakhs and above 64 (15.8%)

Yes 380 (94 %)

Regular filing of IT No 24 (06 %)
return

The analysis of the profile indicates that the age group of 31-40 years constituted the highest
number of respondents. It accounted for 32.7 percent of the sample size followed by 25.7 percent
amongst the age group of 31-40 years.
36.6 percent of the respondents were in the yearly income bracket of Rs 8 to 15 lakhs followed
by 25.7 percent in the bracket of Rs 3 to 7 lakhs, 15.8 percent of the respondents were earning Rs
25 lakhs and above which was the least sample size. 94 percent (380) respondents agree to
regular filing of their IT return while 6 percent of the respondents did not file their IT return
regularly. 94 percent of the respondents were aware that filing of IT return is mandatory after
receiving the Form 16 from the employer. Only 6 percent of the respondents mentioned that they

9
did not file their IT return regularly as TDS was already deducted from their salary. This group
lacked in knowledge that IT return filing is a sine qua non even though employer deducted TDS.
Between the independent factors Age and Yearly Income, cross tabulation was done to identify
the number of times the selected combinations occurred in the sample data.

Table 3: Cross tabulation of Yearly Income and Age

Age Total
21-30 31-40 41-50 51 years
Yearly Income
years years years and above
Rs 3 to 7 lakhs 32 52 12 8 104
Rs 8 to 15 lakhs 40 56 32 20 148
Rs 16 to 24 lakhs 0 16 32 40 88
Rs 25 lakhs and
0 8 28 28 64
above
Total 72 132 104 96 404

The highest combination is seen in the age group on 31-40 years having yearly income Rs 8 to
15 lakhs. This is followed by the age group 51 years and above earning Rs 16 to 24 lakhs and
age group 21-30 years earning Rs 8 to 15 lakhs yearly respectively.

VIII. Result and Discussion

H1: All investors are perfectly aware about their financial goals.
Table 4: Financial Planning across Age group

Sl Dependent Variable Mean ANOVA result Result

No. Square
Financial Planning f p value
1. I believe in need for Financial Planning 220.6 235.7 <0.001 S
2. I have set financial goals 116.4 123.2 <0.001 S
3 I am worried by volatility in the stock
115.4 212.4 <0.001 S
market
4. I switch my investment portfolio frequently 49.7 45.5 <0.001 S
5. I am satisfied with my financial decisions 5.74 5.37 <0.001 S
6. I track and review my portfolio at least half
75.2 62.9 <0.001 S
yearly
7. I invest in different asset classes 120.0 130.8 <0.001 S

S= Significant; NS= Not Significant

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Results show that the significance level (p value) is below 0.05 in all questions asked relating to
Financial Planning, Planning goals and Planning Awareness. Therefore, there is a statistically
significant difference in the mean score of financial planning among the selected age groups.
The hypothesis is rejected and we conclude all investors are not perfectly aware of their financial
goals. Financial planning is the first step in setting the financial goals. Majority of the
respondents lacked the awareness to ‘believe in the need for financial planning’ and ‘set their
financial goals’ at the start of their career. Most of the respondents are also unaware of the
process of reviewing their portfolio and switching their investments in case of poor performance.

H2: There is no difference in the choice of investment options amongst the various
categories of Investors
Table 5: Investment Pattern across Income group

Sl Investment Instruments Mean ANOVA result Result

No. Square
F p value
1. I invest in Stock Market Instruments 12.35 10.03 <0.001 S
2. I invest in Bonds/ FD's 1.82 1.74 0.157 NS
3 I invest in Mutual funds 15.28 14.22 <0.001 S
4. I invest in Real Estate 29.92 21.56 <0.001 S
5. I invest in Bullion & Precious Metal 6.56 4.28 0.005 S
6. I invest in Term insurance products 30.79 24.04 <0.001 S
7. I invest in Medical insurance products 51.05 41.06 <0.001 S
8. I invest in Recurring Deposits 4.64 3.103 0.027 S
9. I invest in NSC & other post office 24.45 18.68 <0.001 S
instruments
10. I invest in PPF/PF/EPF 10.17 9.22 <0.001 S
11. I invest in ULIP 2.58 1.63 0.181 NS

In 9 out of 11 questions asked regarding the choice of investment options, the p value is less than
0.05 and therefore we reject the and conclude that there is a significant difference in the mean
score of various investment instruments to the selected income group. Each investment
instrument carries its own inherent risk and return. From our study we conclude respondents
from all income groups invest in all types of products. The investors are not correctly aware of
which product to invest in given their age and income bracket with the ultimate goal of wealth
creation and retirement planning.

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H3: Individual investor’s financial planning decision is based on professional advice.
Table 6: Financial Planning decision across Age group

Sl Dependent Variable Mean Square ANOVA result Result

No.
F p value
1. I take help from professionals/financial
4.67 2.491 0.614 NS
consultant for personal financial planning

Results show that the p value is more than 0.05 which means there is no significant difference in
the mean score of ‘I take help from professionals/financial consultant for personal financial
planning’ to the selected age group. Therefore we reject the hypothesis that ‘Individual investor’s
financial planning decision is based on professional advice’.
Financial Planning is a scientific process and it requires knowledge investment of time to
understand the various products and suitability of the alternatives. A financial consultant
provides expert guidance to look through the prism of investment instruments and helps in
building the wealth of the investor. Self reading and analysis does not always help to meet the
financial goals.

H4: Individual investor’s financial planning decision is based on advice taken from friends and
family.
Table 7: Financial Planning decision across Age group

Sl Dependent Variable Mean Square ANOVA result Result

No.
F p value
1. I take suggestions from parents, friends,
colleagues and relatives for financial planning
16.51 15.55 <0.0001 S

Results show that the p value is less than 0.05 which means there is significant difference in the
mean score of ‘I take suggestions from parents, friends, colleagues and relatives for financial
planning’ to the selected age group. Therefore we accept the hypothesis that ‘Individual
investor’s financial planning decision is based on advice taken from friends and family.’

Table 8: Correlation of Factors of Financial Planning with Age

Value of Interpretation
Correlation
Investment Instruments Co-efficient
(r)

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 I believe in need for Financial Planning .747 Strong +ve
I have set financial goals .623 Strong +ve
I am worried by volatility in the stock market .714 Strong +ve
I switch my investment portfolio frequently .459 Weak -ve
Age I am satisfied with my financial decisions .600 Strong +ve
I track and review my portfolio at least half yearly .563 Weak +ve
I invest in different asset classes .695 Strong +ve
I take help from professionals for personal financial planning .407 Weak +ve
I take suggestions from parents friends colleagues relatives - .242 Strong -ve

In order to analyze the relationship between age and financial planning, 9 questions related to
financial planning were asked to be rated in the 5 point scale ranging from Strongly Agree to
Strongly Disagree. Out of the 9 factors, 5 factors viz ‘I believe in need for Financial Planning’, ‘I
have set financial goals’, ‘I am worried by volatility in the stock market’, ‘I am satisfied with
my financial decisions’ and ‘I invest in different asset classes’ have a ‘strong positive
correlation’ with age. This implies that as age progresses, the respondents are able to take better
financial planning decision. 3 attributes viz ‘I switch my investment portfolio frequently’, ‘I
track and review my portfolio at least half yearly’, and ‘I take help from professionals for
personal financial planning’ showed ‘weak positive correlation’ with age. The factor ‘I take
suggestions from parents/friends/colleagues/relatives’ showed ‘strong negative correlation’. This
implies that has age increases, the respondents are less likely to seek suggestion from inner circle
of known people for their financial planning.
As 7 out of 9 factors have a positive correlation, we conclude that age does have a positive
correlation with financial planning.
Table 9: Correlation of Factors of Investment Pattern with Yearly Income
Value of Interpretation
Investment Instruments Correlation Co-
efficient (r)
I invest in Stock Market Instruments .678 Strong +ve
I invest in Bonds FDs -.015 Strong -ve
I invest in Mutual funds .743 Strong +ve
I invest in Real Estate .894 Weak +ve
I invest in Bullion and Precious Metal -.038 Strong - ve
Yearly
I invest in Term Insurance products .350 Weak +ve
Income
I invest in Medical Insurance products .459 Weak +ve
I invest in Recurring Deposits -.261 Strong -ve
I invest in NSC and other post office instruments -.289 Strong - ve
I invest in PPF PF EPF .139 Weak +ve
I invest in ULIP -.055 Strong -ve

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To understand the correlation of Income with the choice of investment instruments, the
respondents were asked to rate their preference of selected 11 instruments on a 5 point scale
ranging from Most Preferred to Least Preferred. Investment in Real Estate, Investment in Term
insurance, Investment in medical insurance and Investment in PPF/PF/EPF showed ‘weak
positive correlation’. From this we conclude that as income increases the preference towards
investment in these instruments increases in similar fashion although there is some dispersion.
Investment in Stock Market and Investment in Mutual Funds showed a ‘strong positive
correlation’. This implies, with the increase in yearly income the respondents prefer these modes
of investment. Investment in Bonds/FDs, Investment in bullion and precious metals, Investment
in recurring deposits, Investment in NSC/other PO instruments and Investment in ULIP showed
‘strong negative correlation’. It implies that increase in income led to reduction in investment in
these categories in similar fashion.
As 6 out of 11 factors have a positive correlation, we conclude that income does have a positive
correlation with choice of investment instruments.

IX. Concluding Remarks

This study is evidential that ‘Financial Planning’ is a forbidden topic left to be debated, discussed
and decided by the male members of the family closed door. The spouse is generally left bereft
from the discussion. Individuals’ supposedly feel financial goal setting is not an urgent matter
and the future will take care of itself. However, the truth is juxtaposed to the self limiting belief.
To live exclusively on own savings post retirement, it is imperative to set financial goals and
plan taking expert guidance from a financial consultant at the beginning of the career. People
taking advice from friends and family rather than professionals argue that the cohort of financial
planning professionals lack to offer unbiased choice to the investors.
Majority of the investors are unaware that they can take the benefit of online checking, switching
and redemption of their investments. Capacity building of the investors is very essential. The
investor needs to be aware of asset allocation, risk measures and security selection. Empowering
the investors on how best to use their money is indispensable.
Each investment choice has its pros and cons. Some investment option like equity investments
seek to have higher returns but with equivalent higher risk. On the other hand investments like
PPF are safe investment avenues but with its shortcomings like illiquidity and low rate of return.

14
 Fixed Deposits provide safety and liquidity but at the cost of low return. Mutual funds seek to
combine the advantage of investing in equity while dispensing with the limitations of fixed
income products. Investors need to choose from variety of funds to suit risk tolerance, objective
and investment horizon.
In order to provide a healthy ecosystem for financial planning, three tier system needs to be
followed:
1. Academic Curriculum: Higher education curriculum needs to integrate financial planning
course in every academic department. As future workers, students today would be compulsorily
introduced to the various types of products available as part of investment. The merits, demerits
and the usefulness of every product should be taught to give a firsthand awareness to the
students. This will ensure the ease of reading and understanding the financial product. As
investors they will be in a position to ask intelligent question to the financial
consultants/financial advisors and brokers rather than being gullible targets who park money in
schemes generating low/negative return.

2. Employer: As the employer uses the human capital (employee) to create business, it must be the
moral responsibility of the employer to ensure their well being beyond paying salaries only. The
employer should organize workshops/seminars for financial literacy of its employees. The
respondents for this survey mentioned that the employer never takes any proactive steps to
augment their financial health. When employers start taking initiative for overall financial
betterment of its employees, it will aide in being a effective tool for employee retention. By
providing financial planning assistance, a single employer can definitely set a benchmark in the
industry.

3. Government: Good Demographic dividend and the increase in the average life expectancy
should be a wakeup call for the State to shoulder responsibility for financial literacy of its
citizens. The Companies Act, 2013 has exclusive provisions for utilizing unpaid dividend/
unpaid interest remaining unpaid for more than 7 years to be utilized for propagating financial
literacy. This puts the ball in the court of the corporate entity. Government needs to design
outreach plans for ensuring financial literacy of her citizens. Pointers on steps towards financial
planning can be widely publicized through hoardings and mass media. The various types of

15
investment tools to invest can be distributed as pamphlets. Quizzes to check the level of financial
knowledge and literacy need to be organized. Such type of programs will be both knowledge
enhancement and entertaining.

Quoting Robert Kiyosaki, a financial literacy expert, ‘It’s not how much money you make but
how much money you keep, how hard it works for you and how many generations you keep it for’
appositely sum up the link between age and income with financial planning. The earlier the
investor embeds on the concept of financial planning and chooses the right mix of products;
he/she reaps the benefit of the magic of compounding considered as the 8th wonder of the world.

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