What is Financial Literacy?
Financial literacy encompasses various skills such as household budgeting, debt management, evaluating investment products and understanding how investment decisions impact future tax liabilities. As financial products like mortgages, student loans, health insurance, and self-directed investment accounts become more important, it’s crucial to understand how to use these products responsibly.
Understanding financial literacy is crucial for individuals to avoid making financial mistakes, prepare for financial emergencies, and achieve their financial goals. In addition, financial literacy also enables individuals to approach major life choices with greater confidence, resulting in more successful outcomes and less negative impacts from unforeseen outcomes.
All in all, financial literacy ensures financial security, however, not understanding financial literacy will often lead to overspending, debt accumulation, poor credit, bankruptcy, and housing foreclosure, posing significant risks to an individual’s financial stability.
