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NFLAT National Financial Literacy Assessment Test

NFLAT National Financial Literacy Assessment Test

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NFLAT National Financial Literacy Assessment Test

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  1. NFLAT National Financial Literacy Assessment Test

  2. What is NFLAT • This is a first of its kind national level test, conducted by the National Centre for Financial Education (NCFE), to measure the level of financial literacy among school students. Through this test NCFE aims to encourage school students to obtain basic financial skills which are essential for their full participation in society.

  3. Financial LieracyMoney Matters • Understand the concept of money • a current medium of exchange in the form of coins and banknotes; coins and banknotes collectively. • Money as a medium of exchange and medium of storage • Understanding the concept of net worth • Understand the difference between money and wealth • Difference between Assets and Liabilities

  4. BudgetingBalancing the Means and the Ends • Know the different sources of income • Professional income • Investment income • Active income • Passive income • Understanding expenses • Regular and lump sum expenses • Deficit • Excess • Savings- understand the diff between savings and investment

  5. Cash Flow Statemt

  6. What is Budget • What is opportunity cost • the opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources.

  7. Understanding Insurance and Risk management • Understand the difference between pure risk and investment risk • Pure risk: A category of risk in which loss is the only possible outcome; there is no beneficial result. Pure risk is related to events that are beyond the risk-taker's control and, therefore, a person cannot consciously take on pure risk.  • Investment risk: • The greater return you want, the more risk you'll usually have to accept • The more risk you take with your investments, the greater the chance of losing some or all of your initial investment (your capital) • Know that insurance premium is an expense • Understanding insurance products: Life insurance and General Insurance

  8. Insurance terminology • Indemnity- an amount paid to the individual • Sum assured • Premium • Risk cover • Human life value: Thehuman life value calculator helps you assess the financial loss your family would incur if you were to die today.

  9. Life Insurance • The term plan- pure term • Hybrid plans combining insurance and Investment: Endowment plan, money back plan, whole life plans, ULIPs and Pension plans

  10. General insurance • Medical insurance • Vehicle insurance • Property insurance

  11. Understanding Investment • Need for investment • Diversification as a risk mitigation tool • Liquidity meaning • Learn about growth of money and returns

  12. Inflation • Impact of inflation in short term and longterm on the personal financial plan • Understand the real rate of returns • CPI and WPI • WPI: reflects average price changes of goods that are bought and sold in the wholesale market • CPI: CPI measures price change from the perspective of the retail buyer. It is the real index for the common people. It reflects the actual inflation that is borne by the individual

  13. Inerest • Types of interests • Simple interest • Compound interest • Rule 72 and rule 144 • Understand the effective interest rate and nominal interest rate • Nominal interest rate - Inflation= Effective Interest rate

  14. Rule 72

  15. Rule 144

  16. Basics of banking • Know the type of banks and facilities offered by the banks • Types of bank accounts: savings, current ac, RD acc, FD ac etc • Documents needed for opening an account with bank • PAN card and its importance in operating bank accounts

  17. Cheques • What is account payee cheque • Signing and validity of cheque • Precautionary measures while handling cheque • Understand how we get money by depositing at a bank

  18. Demand Draft Demand Draft is a cheque that contains an order of one branch of a bank ( Drawer branch ) directing another branch of the same bank ( Drawee branch ) to pay on demand a certain sum of money to a specified beneficiary ( Payee ) . It is an Account payee instrument, meaning it can only be credited to the account of the payee and cannot be encashed over the counter by the payee. • Difference between DD and Cheque

  19. ATM • Benefits of using an ATM card • What is ATM PIN • Precautions on using an ATM card • Telebanking • Internet banking

  20. RBI and SBI? • Functions of RBI • Functions of SBI • Nationalized banks • Private sector banks • MNC banks • know about Nigerian scam and scam emails

  21. Understanding borrowing • What is EMI and its parameters: Principle, interest, loan tenure • Concept of amortization • Know how much to borrow • 70:30 rule • Credit cards- advantage and disadvantages and precautions while using credit cards

  22. Loans • Types of loans: personal loan, vehicle loan, housing loan, education loan, business loan, term loan • Interest rates, term of loan, floating or fixed interest rate loan • Loan processing charges • Pre closure of loan • CBIL rating

  23. Stocks and Bonds • Equities, debentures • Mutual funds • Primary market • Secondary market • Stock exchange- BSE and NSE/ NIFY and Sensex • Value of share • EPS and share value • IPO

  24. Reference sites • • • •