financial literacy

Fundamentals About Financial Literacy You Didn’t Learn In College

Financial literacy is the ability to use financial information, knowledge, and skills to develop an effective financial plan that supports specific personal or family, and professional goals. A literate person can develop a long-term and short-term financial plan by applying knowledge and skills acquired through education and experience. financial literacy is important because it enables people to become resilient in dealing with financial challenges they will face in their lifetime.

Financial crises result from the lack of financial literacy.

Financial literacy is a vital part of the education of young people, particularly teenagers. It will make them more aware of the dangers of a financial crisis and help them avoid one at all costs. The immediate result of the lack of financial literacy among young people is the involvement in various criminal activities such as robbery and stealing. The longer-term effects are even worse, leading to drug dealing, human trafficking, and terrorism.

financial literacy

When one is financially literate, they would understand the importance of money in their lives and be able to invest it wisely.

 This way, they would be able to accumulate wealth in their lifetime and not squander it away on short-term pleasures like drugs, drinking, partying, and other forms of self-indulgence. Thus, they would be contributing positively to society instead of being a burden on it. Many governments have made financial literacy compulsory for all citizens starting from the early stages of their lives. While this has been effective for some students, many still fail to grasp its importance because the subject has been taught abstractly without any examples from real-life situations. Students learn about compound interest rates but do not understand how they work when applied to real-life transactions like buying a car or house.

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