Financial Literacy

AAA

DEFINITION of 'Financial Literacy '

The possession of knowledge and understanding of financial matters. Financial literacy is mainly used in connection with personal finance matters. Financial literacy often entails the knowledge of properly making decisions pertaining to certain personal finance areas like real estate, insurance, investing, saving (especially for college), tax planning and retirement. It also involves intimate knowledge of financial concepts like compound interest, financial planning, the mechanics of a credit card, advantageous savings methods, consumer rights, time value of money, etc.

INVESTOPEDIA EXPLAINS 'Financial Literacy '

The absence of financial literacy can lead to making poor financial decisions that can have adverse effects on the financial health of an individual. The advantages or disadvantages of variable or fixed rates is an example of an issue that will be easier to understand if an individual is financially literate. In 2003, the U.S government launched the Financial Literacy and Education Commission. The office is responsible for having resources available for individuals who want to be financially literate.


RELATED TERMS
  1. Consumer Credit

    A debt that someone incurs for the purpose of purchasing a good ...
  2. Asset Management

    1. The management of a client's investments by a financial services ...
  3. Taxes

    An involuntary fee levied on corporations or individuals that ...
  4. Time Value of Money - TVM

    The idea that money available at the present time is worth more ...
  5. Personal Interest

    Interest that taxpayers pay on personal and consumer loans. Personal ...
  6. Financial Hub

    A city or region that is considered to be a focal point for the ...
Related Articles
  1. Investing Basics

    Investors: You Are Responsible For Your Investments

    Should you leave it all up to your broker or take the reins yourself? Striking a happy medium will provide the best returns.
  2. Investing Basics

    Understanding The Time Value Of Money

    Find out why time really is money by learning to calculate present and future value.
  3. Options & Futures

    Variable Annuity Benefits: What The Fine Print Won't Tell You

    Learn the truth before you strap yourself into these annuity "seat belts".
  4. A new poll finds what financial tools Americans are most thankful for -- both sexes say the product they value most is the venerable savings accounts.
    Savings

    Giving Financial Thanks In Thanksgiving Day

    A new poll finds in what financial tools Americans are most thankful for -- both sexes say the product they value most is the venerable savings accounts.
  5. If you have a 401(k), these fund names should ring a bell. Here's how and why.
    Mutual Funds & ETFs

    Mutual Funds Commonly Found In Retirement Plans

    If you have a 401(k), these fund names should ring a bell. Here's how and why.
  6. Investing Basics

    Top Financial Frights: Emergencies & Retirement

    Americans take a certain pleasure in horror at Halloween. Yet there is a realm in which they don't seek horror: their finances. There, the fear is real.
  7. Will mutual funds be replaced by ETFs? Possibly, but it's not too likely and probably not anytime soon.
    Mutual Funds & ETFs

    Will ETFs Eventually Replace Mutual Funds?

    Will mutual funds be replaced by ETFs? Possibly, but it's not too likely and probably not anytime soon.
  8. Chart Advisor

    Be Like Buffett By Buying Financials With This ETF

    Given the strong outlook for the sector, traders have been turning their attention to the Financials Select Sector SPDR ETF and other key players.
  9. Investing

    Opportunity Cost

    Every action has a cost, even the ones you don't pursue. Find out how this is calculated.
  10. Chart Advisor

    4 Hot Financial Sector Stocks

    The financial sector has been a top performer of late. Here are four hot financial stocks that are helping propel it.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center