What is Financial Literacy and Why it is important?

Financial literacy to some people means that you become certified fianncial planner. Some people means means understanding financial matters. But the actual meaning of financial literacy is the basic understanding of role of money in the world and how money can be earned and spent. How money can be donted to help the needy people. In other word, financial literacy menas to understand all matters related to finance and ability to use your skills to manage your money in personal life. It is debit and credit management and basic knowledge to make financially responsible decisions which are integral to everyday life. Financial literacy of a person really impacts the decision made by a family in balancing his budget, buying a home and funding the education of their children etc.

The financial literacy level can vary with respect to education and income level, but a lot evidence shows that consumers having high education and high income become ignorant about their financial matters and as less educated and lower income consumer becomes. In general, there is inverse relationship between low income individuals and low financial literacy. The more one become highly educated, the more he is high financially literate and vice versa.

Financial literacy can benefit all age and income of people. It provides the basic tools for budgeting and saving so that expenditures and debts can be kept controll. Financial literacy can help people to acquire decisions about saving their income for the future and the education of their children. Financial literacy can also help the poor to manage their expenses within the allocated budget and help them to avoid the high cost transactions.

Financial literacy level can affect your quality of life significantly. It affects your ability to allocate daily budget, your atitude to money and investments as well as your contribution to your needy people and your community. Financial literacy makes people able to understand what is needed to spend a decent and comforable life which is financially balanced, responsible and sustainable. It also helps to create enterpreneural ability to invest other people’ money to generate porfit and create employment opportunities for others.