Definition of Financial Literacy

Financial literacy is referred to knowing, understanding, and applying financial skills like budgeting, investment decision making, and management of financial matters. Being financially literate is beneficial for individuals as people are less likely to be victimized by financial fraudulent activities.

People who are not aware of technical terminologies or misunderstand the terms are easily affected negatively by the complexities of financial matters. A financially literate person can plan long term and make things controllable for example, how much you should spend in a month without compromising your upcoming obligatory payments like debt repayments.