What is Financial Literacy?
What is Financial Literacy?
Posted in Dinar Recaps Archives on 7/27/2019
What is Financial Literacy?
By JJ
Do you feel like you are financially literate?
Do you know what financial literacy is?
If not, that’s okay.
The goal of this post is to help you to understand what financial literacy is and why you should care about it.
Let’s break it down.
Let’s start with the word literacy. When someone is ‘literate’ it means they have the knowledge and skills that are necessary to read and write.
When someone is ‘financially literate’ it means they have the knowledge and skills that are necessary to make well informed decisions about their personal finances.
A Definition Of Financial Literacy
The Organization for Economic Co-operation and Development (OECD) and it’s International Network on Financial Education (INFE) define financial literacy as:
“A combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.”
People who are financially literate are able to effectively do things such as:
Make a budget
Save money (for a car, house, retirement etc.)
Pay off (or avoid) student loans
Use a credit card
Achieve financial stability
Etc….
People who lack financial literacy often find themselves in the following situations:
Unable to make a budget
Unable to save money
Unable to pay off their student loans
Drowning in credit card debt
Living pay check to pay check
Etc….
You get the picture.
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