As Pakistan continues to grapple with widespread poverty and inequality, the importance of financial literacy cannot be overstated. However, a survey conducted by the State Bank of Pakistan reveals that a disturbingly low percentage of adults in the country possess basic financial literacy— just 23 percent. This lack of financial knowledge can have serious consequences, leading to poor financial decision-making and hindering an individual’s ability to achieve their financial goals.

Financial literacy is not just important for adults; it is equally crucial for children and young adults. By making them aware of financial concepts and tools from an early age, we can help them develop good money habits and understand the value of saving and investing. Financial literacy can also help children and young adults make informed decisions about how to use their money, such as how to budget for expenses and how to save for the future. By investing in financial literacy for the next generation, we can set them up for financial success and help them make informed financial decisions throughout their lives.

Low-income individuals in Pakistan can also benefit from financial literacy. This can help them make the most of their limited resources and improve their financial well-being. By increasing their financial knowledge, these individuals can make the most of their limited resources and improve their financial well-being. For example, financial literacy can help them identify and avoid financial scams, choose affordable financial products and create a budget to stretch their money further.

Financial literacy is also important for retirees, who can benefit from understanding how to manage their retirement savings and income, such as how to invest their savings and how to manage their expenses after retirement. This can help them maintain their financial security and independence in their later years.

Small business owners in Pakistan can also benefit from financial literacy. It can help them understand financial concepts like cash flow, profit and loss, and budgeting. This knowledge can help them make informed decisions about how to manage their business finances and grow their business, which can in turn create more job opportunities and contribute to economic growth in the country.

Using financial literacy as a tool for different segments of society can lead to financial inclusion, which is a significant challenge in Pakistan. Financial inclusion refers to the ability of individuals and communities to access and use financial products and services. Thus, financial literacy can help individuals and communities overcome barriers to financial inclusion.

In addition to enabling financial inclusion, financial literacy can also contribute to economic inclusion, which refers to the ability of individuals and communities to participate in and contribute to the economic life of their society. This is particularly important in Pakistan where unemployment is a significant problem. According to the Pakistan Bureau of Statistics, the unemployment rate in Pakistan was 8.3 percent in 2021, which translates to around 7.8 million unemployed people in the country.

By promoting financial literacy and enabling financial inclusion, we can help create a more economically inclusive society in Pakistan. When businesses have access to credit and financing, they can invest in their operations, hire more employees, and expand their businesses, which can help create more job opportunities and contribute to economic growth.

In addition to enabling financial inclusion and contributing to economic inclusion, financial literacy also has the power to promote social inclusion in Pakistan. By improving individuals’ and communities’ economic well-being and reducing income inequality, financial literacy can help create a more cohesive society and enable everyone to participate in the social and cultural life of their community.

According to the World Bank, the country’s Gini coefficient, which measures income inequality, was 0.34 in 2018, indicating a moderate level of inequality. In addition, an estimated 30 percent of the population of Pakistan lives below the national poverty line, with poverty being particularly prevalent in rural areas and among certain social groups, such as women and children.

To address these issues, it is important for individuals and communities in Pakistan to have access to a range of financial products and services that can help them improve their economic and social well-being. By increasing financial literacy and promoting financial inclusion, more people participate in the formal financial system, such as by opening bank accounts, taking out loans, or investing in stocks or other financial instruments.

This can help them access a broader range of financial services and products, which can improve their economic and social well-being and participate in the social and cultural life of their society.

In short, financial literacy is a key tool for promoting inclusion in Pakistan. By increasing financial literacy, Pakistan can work towards financial inclusion, economic inclusion and social inclusion, leading to a stronger, more prosperous society.

The State Bank of Pakistan recognises the importance of financial literacy and has taken the initiative to support and enhance the financial literacy ecosystem in Pakistan; the National Institute of Banking and Finance (NIBAF) launched National Financial Literacy Programme for Youth (NFLP-Y) at the behest of the State Bank of Pakistan.

The NFLPY aims to educate young people about financial concepts and tools and to help them develop healthy money habits that will enable them to make informed financial decisions and achieve their financial goals.

Through this programme, the State Bank of Pakistan is taking an important step toward increasing financial literacy and helping build a more financially inclusive and prosperous society in Pakistan. Moreover, incorporating financial literacy into the National Curriculum in Pakistan can be a powerful tool for improving the financial well-being of individuals and communities, promoting economic and social inclusion, and contributing to the country’s economic growth.

The writer is chief executive officer of Pakistan Alliance for Early Childhood