What is Financial Literacy and its Importance

Financial literacy. Yeah, big word as may it sounds, intimidating as it is, some may think that those terms are only meant for people who are working in a business world, or who are working in banks or somehow related to money and finances. 

But did you know that even at a younger age you have already encountered or had a glance of these terms but you are not just aware of them?

Let me give you an example. I remember when I was in elementary, my mother used to give us our weekly allowance. At a younger age, you need to know the value of money, how you will budget it, and how you will survive in one week. 

In that situation, we have already encountered the word “financial literacy”. 

What is Financial Literacy?

According to Investopedia “Financial literacy is the ability to understand and effectively apply various financial skills, including personal financial management, budgeting, and investing.” 

But not all are lucky enough to have the knowledge to handle their money even if they have encountered it at an early age. Some may also experience it when they are already an adult. 

And as the saying goes, “It’s easier to build a strong child than to repair a broken man.”

It is not early nor late to learn how to be financially literate. The question is how eager are you to learn and change your life?

Importance of Financial Literacy

Being financially literate helps us understand the value of money and manage it well.

It saves us from acquiring debt by having discipline and self-control.

It allows us to share our knowledge with our colleagues or the younger generation. 

To know how money works for us even when we are sleeping.

It prepares us at times of emergency.

It can help us to acquire and achieve our dreams and future plans.

And when we have more, we have the opportunity to share it with others especially those less fortunate.

What does it mean to be financially literate?

When you are financially literate, you know how much you earn, including your pay, your benefits, and your deduction. 

You know how to spend wisely by using a budget.

You know how to save and invest.

Also, you know the importance of emergency funds.

You know how to protect yourself by buying insurance.

You prepare for your retirement.

Final Thoughts

Your level of financial literacy can affect the quality of your life. It affects how you provide for yourself and your family. In addition, how you handle your finances, your attitude towards money, and investment as well as your contributions to your community. 

It is not too late to learn financial literacy and to discover many things about being financially literate. It is your eagerness and determination to change your life, and you have to start NOW.