• What is Financial Literacy?
Financial literacy is an education and understanding of various financial areas. It is the topics related to managing personal finance, money and investing. These topics are focused on the ability to manage personal finance elements in an efficient manner. It also includes the knowledge of making suitable decisions about personal finance, such as insurance, real estate, investing, tax planning, budgeting, retirement and paying for college.
The importance of Financial Education is that it helps individuals become self-sufficient so that they can achieve financial stability. Those who understand the subject should be able to know whether an item is required, whether it is affordable, whether it is an asset or a liability.
This territory demonstrates the behaviors and attitude that a person possesses about money that is used in his daily life. Financial literacy shows you how an individual makes his final decisions in his daily life. It helps a person develop a financial guidebook to identify what he earned at that time, how much he spent and what he owes. Financial literacy also has an effect on small business owners, who always contribute greatly to economic growth and stability of a land.
Financial literacy is a topic that effect people of all ages and all socioeconomic levels. It is a topic that causes many people to become a victim of predatory lending, fraud, high interest rates, subprime mortgages, bankruptcy, potentially resulting in bad credit or foreclosure.
If someone has the lack of financial literacy, it can lead to owing large amounts of debts and making weak financial decisions. For example, the advantages or disadvantages of fixed and variable interest rates are concepts that are easier to understand and to make informed decisions about it if you possess financial literacy skills. There are a lot of people who lack the basic skills to reconcile their bank accounts, pay off debts, pay their bills on time and plan ahead for the future.
The main way to achieve financial literacy includes learning the skills to create a budget, learning the techniques to pay off debts, the ability to track spending and effectively planning for retirement. These steps can also consist of counseling from a financial expert. The things you can learn about the topic involves understanding how money works, creating and achieving financial goals and managing internal and external challenges.
Financial literacy education should also include organizational skills, consumer rights, attention to details, technology and global economics because it can affect the economy of the land.
A lack of financial literacy is not problem but only in emerging or developing in the economy. The level of financial literacy varies according to the education and income levels, but proof shows that the highly educated consumers with high incomes can be just as ignorant about the financial issues other than less-educated, lower-income consumers.
• What is Financial Literacy?