‘The state of being satisfied that something is good or right’ this is how the Oxford dictionary defines the word happiness. Some psychologists feel, happiness is important because it has some undeniably positive benefits and co-occurring factors, which influence other aspects of our lives. It is arguable to define one particular source of happiness. It subjective and hence differs from person to person.
In this article, we will be talking about the happiness that financial literacy brings with it. In a developing country like India, despite touching the heights, there are still sections of society who are struggling with issues, which can be resolved by financial education. For instance, a woman in a remote village earns a sufficient amount to sustain her house but could not save due to mismanaged funds or lack of awareness of various investment policies. Despite having the potential to make some savings, she fails and eventually finds herself surrounded by the turmoil. Had she been financially literate, she would have been able to deposit some amount of her earning in a bank account, which will give a sense of security along with the happiness of being financially stable.
Nevertheless, some people might argue that financial literacy is only essential for people living in rural areas or who are less educated. Although, this argument is as good as the theory of the earth being flat. Financial literacy is apparently an essential need for everyone irrespective of age, gender, and socio-economic background and brings the same amount of happiness to a financially literate student as it will bring to a person living in a remotely located village.
Globally, various studies have proved the relation between financial literacy and happiness. To quote one, in May 2004, the American Institute of Certified Public Account (AICPA) carried out a study on volunteers from different age and occupations to find out the linkage between the two. The study was divided into five parts. The first two adapted two psychological concepts i.e. Self-determination theory to refine the measures financial positive attitudes such as financial self-efficiency, financial autonomy, and financial community and relatedness. Whereas, in the second phase, happiness was measured by several measures of psychological health like vitality, depression, anxiety, etc. The results indicated that the participants with a positive attitude towards finances are happier and have strong financial literacy.
In recent times, the world has witnessed a rise in mental health issues such as depression, anxiety, and many more, which has not only affected the individuals but also society at large. Financial literacy, however, is known to improve economic health but has been silently improving mental well-being too. The need of the hour is to honor financial education and make more and more people acquire it.