Financial Literacy


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.

BREAKING DOWN '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.

  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. Consumer Credit

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

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