Financial Literacy - Introduction
What is Financial Literacy?
You might not be familiar with technical terms for the world of Finance, but it is important for you to understand the basics of it.
This is how we define Financial Literacy
Financial Literacy is the ability to understand personal finance terms like investing, saving, and budgeting finances. It all starts right from planning, deciding, and organizing your money. Based on that you utilize it for spending, saving for the future, etc. Financial literacy is based on your relationship with money and how you deal with it, it is a never-ending journey where you only learn. The Earlier you start it is better for you to manage your finances. Once you are educated you can help your references with this and also learn more by sharing and caring.
Universities or High school education doesn’t teach us the practicality of personal finances, hence we tend to lose our way when we start planning finances. . One can’t blame anyone for this, but the ability to develop this change can be done by educating yourself through reading newspapers, listening to courses and podcasts.
People who lack knowledge, make poor financial decisions and end up losing quite money or are victims of scams. During Covid-19, people were forced to use digital banking methods and get habituated to online methods where few became the victim of cyber-crimes like sharing their OTP, Credit card info, etc. Financial literacy can help protect individuals from averting such crimes and frauds.
Why Financial Literacy is Important?
During our lifetime we have to take personal financial decisions which can affect our future. It can be buying a car, paying college expenses, buying a home, retirement planning, or investment in stocks, etc. While taking such decisions we should be aware of benefits and risks, this becomes critical if we go wrong here it will impact and bring down to impact your worse, and it won't be easy to come out of it. Hence, the more you know about personal finance the better the decisions you can make and handle your money accordingly. If you are unsure about the decision it is advisable to consult a financial expert for your concerns.
Financial literacy helps you to plan better ,look at your inflows and outflows and also make the best possible use of your resources. Still, it can be a problem until you get a return on investments and when it comes to paying your bills you don't manage well, that is the reason it is important for you to understand financial literacy.
Traditional lenders look for people who are financially illiterate forcing them to pay high interest rates, taking advantage of a lack of financial knowledge which can lead to high debt, bankruptcy, etc. It becomes crucial as it will equip you with knowledge and tools to make strong decisions.
In the upcoming part of the blog, you will get to know deeper knowledge on handling your finances and improving financial literacy.