Financial literacy is the ability to comprehend and use financial management skills. It’s the ability to make decisions that align with your values and goals which include creating budgets that save money, managing debt and investing in long-term goals, and safeguarding against unexpected expenses.
A lot of people struggle with their financial knowledge. Insufficient knowledge of money results in high-interest student and credit card loans, living paycheck to pay check, and a lack of saving and planning for the future. These issues can have an impact on the quality of life for a person which causes them to lose sight of their long-term financial goals, including retirement and homeownership.
There are several ways to improve one’s financial literacy, ranging from formal education to community and family initiatives. Local community groups banks, financial institutions, and government organizations can offer classes on topics in basic financial management like budgeting, saving and investing. These classes can include guests speakers and interactive activities to encourage discussion and present real-world examples.
Some states also require personal finance classes in schools. This could improve access and equity for those who may see this site not otherwise have access to it. Additionally, nonprofits like Next Gen Personal Finance offer teacher stipends and professional development to make sure that teachers are better prepared to teach their students about financial literacy. These efforts are essential as an understanding of financial literacy can assist you to to manage your finances and budget effectively, as well as invest over time.