If you have read education and financial news recently, you may have come across the term financial literacy. Financial literacy is the ability to learn about money and finances, with a particular focus on the personal finances of individuals. It’s about understanding money-related issues, using your brain in financial decisions, and managing your financial assets and liabilities.
Financial literacy is paramount because it gives you the knowledge and skills you need to manage your money effectively. It is also critical, as it helps you to prepare for the skills you need to manage money and to avoid getting into financial difficulties.
Improving your financial literacy is necessary because it helps you get the most out of the money you earn. Having it makes things easier for you, like saving for retirement, buying a home, and even putting your kids through college.
If you take a financial literacy quiz, it will likely help you pinpoint where you need to strengthen your understanding of money.
Many organizations support the “financial literacy” movement, but their definitions differ. Some financial and literacy researchers have expressed concern that there is a lack of evidence to justify financial illiteracy education – but we respectfully disagree.
The Federal Financial Literacy Education Commission has identified five principles of financial literacy. The authors call for a uniform definition of financial literacy to assess financial literacy education programs.
The aim is to create a population that is better able to make informed financial decisions. Financial literacy means understanding how money works in business and personal life. It helps you see your overall financial picture in a clear light so that you can make the best decisions for your financial goals. This way, you understand how to make sound financial decisions so that you and your money can grow more confidently.
Basic financial literacy is not taught in schools. But parents can make progress by encouraging their children to learn about money at home.
Of course, free courses and financial literacy information are available online. Students are empowered to make informed decisions about what they learn in school and how they apply their learning in the real world.
Interestingly, college-educated millennials consider themselves highly financially competent. But in reality, only 34% have basic financial literacy. Only 24% of this generation have basic financial skills, while only 17% (or 1.5 million people) of 20 and 30-year-olds have high financial literacy.
If you want to pursue a career in financial literacy, the courses offered through edx.org provide the knowledge and expertise to help you improve your financial future. You can also benefit from courses on saving for college, and careers in finance, as well as other financial topics.