01/10/2023
It’s no secret that money plays a role in all of our lives daily, but not always in obvious ways. From the clothes you wear to the type of work you do, even down to the brand of dish soap you use, money guides countless decisions that shape our lives. The omnipresence of money sets the stage for the vital importance of financial literacy.
Financial literacy — familiarity with fundamental money topics — is precisely the knowledge base we need to navigate this money-driven world. Unfortunately, this critical skill set is in short supply. The 2014 S&P Global Financial Literacy Survey found financial literacy in the US was only 57%. Nearly half of Americans could not correctly answer four simple questions on financial decision-making.
This Day in History
Whether we like it or not, money influences our daily decisions. We can approach those decisions as informed consumers by equipping ourselves with the proper knowledge.
What Is Financial Literacy?
Financial literacy encompasses a range of money management knowledge and skills that help people manage their money. Budgeting, debt, investing, credit, and more all fall under this umbrella.
Financially literate people understand the core mechanics of their finances and can use that understanding to make informed money decisions. In addition, when faced with new or unfamiliar money concepts or terminology, money-smart people can apply their existing knowledge to adapt.
In an age of financial scams, credit card fraud, identity theft, and flimflam artists of all sorts, the ability to manage money wisely is more than a luxury; it’s a necessity.
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This Day in History
Whether we like it or not, money influences our daily decisions. We can approach those decisions as informed consumers by equipping ourselves with the proper knowledge.
What Is Financial Literacy?
Financial literacy encompasses a range of money management knowledge and skills that help people manage their money. Budgeting, debt, investing, credit, and more all fall under this umbrella.
Financially literate people understand the core mechanics of their finances and can use that understanding to make informed money decisions. In addition, when faced with new or unfamiliar money concepts or terminology, money-smart people can apply their existing knowledge to adapt.
In an age of financial scams, credit card fraud, identity theft, and flimflam artists of all sorts, the ability to manage money wisely is more than a luxury; it’s a necessity.
Benefits of Financial Literacy
There is no single purpose of financial literacy. In truth, there are many. Studies have shown that financial literacy has a clear positive impact on household wealth.
It’s more than the strictly monetary benefits, though. Good financial skills also have personal benefits connected to your goals, self-image, and even your emotional well-being.
A Strong Foundation
Whatever your long-term financial goals may be, success starts with financial literacy. So whether your main focus is becoming debt-free, building toward financial freedom, or saving for a leisurely retirement, you will want to approach it with a firm grasp of the fundamentals.