Why is financial literacy so important?

Taking control of your life and finances.

Financial literacy ?refers to having the knowledge and skills to make informed financial decisions. Budgeting, managing debt and investing all fall under the umbrella of financial literacy.

A financially literate person is someone who can:?

• Confidently manage their finances
• Apply financial concepts to daily life?
• Set and achieve financial goals
• Evaluate financial products, services and advice?

Ultimately, financial literacy is kind of like a driver’s license – you use it to get yourself where you need to be. If you’re ready to begin your financial literacy journey, you’re in the right place. Keep reading to learn what financial literacy is, where it’s taught and tips for strengthening your understanding of basic concepts.

Let’s do it!

Financial literacy in context

Studies suggest we’re not very confident about money. The?2020 OECD Survey of Adult Financial Literacy ?found that only 17% of respondents self-assessed their knowledge of financial topics as high. 26% estimated their knowledge as low.

The thing is, financial literacy is an essential part of our daily lives. Money has the power to impact everything from our relationships to mental health. And we rely on savvy financial decisions to get the things we want in life, whether that’s a house or a gym membership (which, let’s be honest, is almost as expensive as a house).?

Financial literacy has become even more important in recent years,?as credit and investment options grow more complex . The products we’re choosing from today (I’m side-eying you, BNPL ) are more sophisticated than those available to our parents and grandparents – and advancements in technology add?another?layer of complexity. Not to mention that the sheer?number of financial products has also increased , meaning we have more options (nice!) but also more information to consider before making a decision.?

Plus, the skills associated with financial literacy are essential during a crisis. During the?COVID-19 pandemic , many people lost their jobs. Schools and businesses shut down and economic uncertainty surfaced. Basic financial knowledge can?help those who get left behind ?in economic downturns take back some control.?

Our financial environment is global?and constantly changing .?Economic factors like inflation ?and?technological advancements like electronic trading ?have made markets more?volatile ?than ever before – meaning?prices move up and down a lot, contributing to higher risk . Financial literacy is essential to navigating these rapid changes.

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