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  • Advancing financial literacy can indeed pave the way for a more financially secure future for all Pakistanis

Financial literacy is not a one-size-fits-all concept. While April is recognised as Financial Literacy Month, it’s crucial to understand that financial knowledge and skills are important throughout a person’s life. This article will explore the current state of financial literacy in Pakistan, the benefits of being financially literate, and steps that can be taken to improve financial literacy for all ages.

Financial literacy is a broad concept but in particular, what we’ve been focused on is people’s ability to process economic information and to make informed decisions about things like saving, investment, and spending during retirement.

While there’s always room for improvement, we’re starting to see positive shifts in financial literacy. Our studies across Pakistan and internationally show progress, but there’s no denying there’s still significant work to be done. It’s an ongoing effort, and I’m confident that by continuing our efforts, we can bridge the financial knowledge gap.

Studies by the State Bank of Pakistan have shown that Pakistan has a low financial literacy rate, with only around 26 per cent of adults considered financially literate. This highlights a significant knowledge gap that can hinder individuals’ ability to manage their finances effectively.

Financial literacy

Financial literacy empowers individuals to make informed financial decisions. This can lead to several positive outcomes, including:

  • Financial literacy equips individuals with the tools to budget effectively, save for retirement, and plan for unexpected expenses.
  • Understanding financial concepts can help individuals feel more in control of their finances, leading to reduced stress and anxiety.
  • Financial literacy can help individuals avoid taking on unnecessary debt and develop strategies for managing existing debt effectively.
  • Understanding different investment options allows individuals to make informed choices that align with their financial goals.

Similar to other forms of education, financial literacy requires ongoing effort. Grasping financial concepts and applying them effectively takes time and dedication. While resources like courses or professional guidance can be helpful, achieving financial literacy isn’t necessarily cost-prohibitive.

Furthermore, financial knowledge is a perishable skill. Just like any other learned skill, it needs regular practice. New financial products like adjustable-rate mortgages continuously emerge, requiring us to continually update our knowledge base. This emphasises the importance of lifelong learning when it comes to managing your finances.

The good news is, that financial literacy is increasingly recognised as an educational process. Many employers understand the negative impact of financial stress on employee productivity. They’re taking steps to address this by offering financial literacy training in the workplace. This benefits everyone — employees gain control over their finances, reducing stress and improving productivity, while employers enjoy a more stable and focused workforce.

Closing the gap: Improving strategies

There are several steps that can be taken to improve financial literacy in Pakistan:

  • Early financial education: Integrating financial literacy into school curriculum at a young age can equip students with the foundational knowledge and skills they need to make sound financial decisions throughout their lives.
  • Accessible resources: Developing and promoting accessible resources such as online courses, workshops, and educational materials in local languages can empower individuals of all ages and backgrounds to learn about personal finance.
  • Targeted outreach: Implementing targeted outreach programmes tailored to specific demographics, such as women, young adults, and low-income individuals, can address the unique challenges these groups face in improving their financial literacy.
  • Collaborative efforts: Collaboration between government agencies, educational institutions, financial institutions, and community organisations is essential to leverage resources and expertise in promoting financial literacy initiatives.
  • Lifelong learning: Encouraging continuous learning and engagement with financial topics through seminars, webinars, and community events can help individuals maintain and expand their financial knowledge throughout their lives.
Real-life examples

Let’s consider the case of Ayesha, a young professional in Pakistan. Ayesha struggled with managing her finances, often overspending and neglecting savings. However, after attending a financial literacy workshop organised by a local nonprofit, Ayesha learned about budgeting, saving strategies, and the importance of emergency funds. As a result, Ayesha was able to improve her financial habits, build savings, and feel more confident about her financial future.

For example, if you don’t understand interest rates, and heaven knows that’s been in the news a lot lately, they won’t refinance their loans when interest rates go down, or they pay too much for borrowing, or they fail to insure themselves against living a very long time. If you’re going to retire at 60 and live to 100, and mark my words, a lot of us will, that’s a whole long time to try to live on your savings if you haven’t concentrated on it properly early in life.

Technology’s role

In today’s digital age, technology plays a pivotal role in promoting financial literacy. Mobile apps like budget trackers, investment platforms, and educational games make financial education accessible and engaging for people of all ages. Platforms like Khan Academy and Coursera offer free online courses on personal finance topics, allowing individuals to learn at their own pace and convenience.

Behavioural economics

Behavioural economics offers insights into why individuals sometimes make irrational financial decisions. Concepts like loss aversion, present bias, and social proof influence our financial behaviours. By understanding these biases and learning how to mitigate them, individuals can make more rational and beneficial financial choices.

Women in Pakistan often face unique challenges in achieving financial literacy, including gender-based financial disparities and limited access to financial resources. Initiatives that focus on empowering women through financial education, entrepreneurship training, and access to financial services can contribute significantly to bridging this gap.

Special knowledge

According to CEO SLIC Shoaib Javed Hussain, “both female health and education inclusion are imperative for the women of our country to have equality and feel empowered. It falls upon national institutions to come together and find solutions which financially enable and support them in making key life decisions.”

In his keynote address, the Governor said that State Bank of Pakistan (SBP) fully recognises access to financial services as a fundamental right, and SBP’s mission is to empower every citizen by providing them with the tools and knowledge needed to participate fully in the economy.

“Financial inclusion is a cornerstone of a thriving and equitable economy. When more people have access to financial services, it creates a broad base of consumers, savers, and entrepreneurs, and helps stimulate economic growth.”

Another important type of literacy that is severely lacking in Pakistan is financial literacy. According to the Standard & Poor’s Ratings Services Global Financial Literacy Survey, only 26 per cent of the adult population is financially literate. Technically speaking financial literacy is the “cognitive understanding of financial components and skills such as budgeting, investing, borrowing, taxation, and personal financial management.”

In layman’s terms, it may be understood as the ability to make wise decisions with your money. The existence of financial literacy in a society helps in making better financial decisions and improves the overall financial well-being of the citizens. As Pakistan strives for economic prosperity, the complexity of financial products continues to rise.

Policy changes

Policy changes play a crucial role in promoting financial literacy. Governments can introduce mandates for financial education in schools, enforce consumer protection regulations, and incentivise financial institutions to offer transparent and affordable financial products. These policy initiatives create an environment conducive to improving financial literacy at a national level.

Leading players and trends

Despite the focus on financial literacy, it’s important to recognise other avenues that contribute to financial security. The insurance industry in Pakistan has shown resilience, experiencing growth even amidst economic pressures. This growth can be attributed to factors like inflation leading to increased premium rates and the government’s expansion of health insurance programmes.

Pakistan’s insurance industry boasts a diverse range of companies catering to various insurance needs. Here are some of the key players:

  • State Life Insurance: The industry leader, holding a significant market share (over 70% of GWP in 2023).
  • Jubilee Life and EFU Life: Major contenders following State Life Insurance.
  • Other Notable Players: Adamjee Insurance, Pak Qatar, United Insurance Pakistan, UBL insurers, East West Insurance, Atlas Insurance, Security General, and Askari General.

It’s worth noting that State Life Insurance remains the dominant force in the Pakistani insurance market. However, the industry as a whole has witnessed growth, even amidst economic challenges. This growth can be attributed to factors like inflation leading to increased premium rates and expansion of government health insurance programs.

Government initiatives

The Securities and Exchange Commission of Pakistan (SECP) is taking proactive steps to strengthen the insurance sector. They recently conducted a review of international practices and initiated the development of a five-year strategic plan titled “Journey to an Insured Pakistan.” This plan aims to strengthen the three pillars of the insurance ecosystem – policyholders, insurance providers, and insurance intermediaries. The plan involves collaboration with industry leaders and focuses on addressing key areas like:

  • Digital distribution: Facilitating the sale of insurance products online can improve accessibility and convenience for consumers.
  • Human resource development: Investing in training programmes can equip insurance professionals with the necessary skills and knowledge.
  • Public awareness campaigns: Educational campaigns can raise public awareness about the importance of insurance and different types of insurance products available.

Financial literacy is a crucial skill for everyone, regardless of age or background. By investing in financial education, leveraging technology, addressing behavioural biases, advocating for policy changes, promoting financial planning, and incorporating expert insights, we can empower individuals to make informed financial decisions, build resilience against economic uncertainties, and achieve greater financial security for themselves and their families. Let’s work together to unlock the transformative potential of financial literacy and pave the way for a more financially secure future for all Pakistanis.


The author is an Insurance & ICT expert with over 12 years of experience in the field. He is deeply passionate about empowering young people in Pakistan and contributing for the development of the country. Kapeel believes in helping youth develop the necessary skills to thrive in the digital age. Through his expertise and commitment, he strives to contribute to the country’s technological advancement and economic growth.