This research is to determine the need for financial literacy among individuals for effective decision making in managing the investments efficiently. A descriptive research design with a quantitative approach has been adopted for the study. Data was collected from 500 individuals of the southern states of India through a survey. The southern states have a literacy rate higher than the national average. The data was analysed using tools such as ordinal logistic regression. The results showed that, there is a necessity for financial literacy for both men and women. Only one fourth of the respondents are financially literate. The awareness of financial instruments among urban individuals is typically high, but the lack of thorough understanding of the investment avenues reduces their risk-taking potential, which inhibits them from making effective decisions. During the pandemic crisis, it was observed that due to the imposed lockdown, citizens of India struggled to manage their routine livelihood with low income and without any proper savings to meet their expenses. The results show that the majority of the respondents have low financial literacy and are not much informed on different investment avenues, leading to inefficient management of income. The novelty of this research is that it also studies the influence of risk perception of financial markets among individuals in southern states of India on financial literacy. The financially literate respondents also do not invest in all avenues due to risk aversion. The study calls for future research in other states of India to understand their knowledge on financial literacy.