When you consider a country as diverse as India, you will realise that there are thousands of communities in the biggest democracy in the world. Since some people follow different religions or belong to a specific caste group, they have been categorised as a particular community. Not only that, communities in India or other countries are also based on their geographic location or any other factor common in multiple individuals.
However, similar to an economy, business, or individual, one thing remains common for communities: financial sustainability. Communities must ensure that they are financially stable in the long run by creating financial policies or making financial decisions that can sustain them for years to come. This blog will help you understand financial sustainability and the strategies for promoting financial sustainability in communities.
What is financial sustainability
Financial sustainability refers to a situation in which financial policies and decisions benefit an economy, business, community, or individual more in the long term than in the short term. For communities, financial sustainability is essential for long-term economic stability, growth, and an improved standard of living. Decisions made considering financial sustainability ensure that individuals and families can meet their needs while planning for the future without relying heavily on debt or external aid. It also means that the community stays liquid even if the market conditions are negative.
Strategies for promoting financial sustainability in communities
One of the most effective ways to promote financial sustainability in communities is to provide them with financial education and economic knowledge. Many small families or communities struggle because they lack basic financial knowledge and are negatively affected by even the smallest decline in economic performance. Conducting workshops and awareness camps or offering free courses can help them make sustainable financial decisions. Furthermore, financial education can be included in school curricula to ensure a better approach to financial knowledge.
Encouraging savings and investment
A community must encourage its members to save as much as they can by avoiding unnecessary expenses and creating a well-planned budget. Savings can help the community to have liquid funds from which they can create an emergency fund in case they need money for emergencies. Furthermore, they can also use the savings to invest in various investment instruments such as FDs, RDs or market-linked instruments such as equities or mutual funds. Additionally, savings can be used to buy group insurance for the whole community to create a financial bubble in case of any eventuality.
Improving access to financial services
Limited access to banking and financial services can be a barrier to financial sustainability. Suppose communities are not financially included and can not open a bank account or use digital banking services. In that case, it can force them to lose out on financial sustainability as they will not have access to banking facilities and features. Communities should work toward financial inclusion by encouraging the establishment of local banks, credit unions, and digital banking services. Mobile banking and fintech solutions can provide financial access to remote and underprivileged areas, ensuring that everyone has opportunities to save, invest, and borrow responsibly.
Community-based financial initiatives
One popular way for communities to ensure long-term financial sustainability is through adopting the cooperative financial model. A cooperative model is a banking model where members of a specific community come together and deposit their money to be lent to others and earn profits. This model can immensely help communities to ensure they have collective profits and use them for the betterment of society and long-term financial sustainability.
Strengthening government policies
Government support plays a vital role in financial sustainability. Policies that promote fair wages, affordable housing, and accessible healthcare can reduce financial stress on communities. Social security programs, such as pension schemes, unemployment benefits, and financial aid for small businesses, provide stability and protect individuals from financial shocks. One strategy can be to advocate for such policies and request the government to amend existing policies to ensure they promote financial sustainability for communities across the country.
Conclusion
Achieving financial sustainability in communities requires a collective effort from individuals, businesses, financial institutions, and governments. Communities can create a strong economic foundation by promoting financial literacy, supporting local businesses, improving access to financial services, and implementing community-based initiatives. Furthermore, communities can adopt a banking model similar to NBFCs and create their own online marketplaces and platforms. Through these strategies, communities can build a future where financial stability is not just an aspiration but a reality for everyone.
