Financial literacy is simply being aware of how to use your finances such as income and other assets. Financial literacy nowadays is grabbing the attention of people of all ages because money has become so much important for survival. For the reason that the world has become extraordinary competitive in terms of economy, every individual needs to know about the usage of their income in order to make wise choices. The question arises why is it important to know about finances? The reasons are the following:
- Financial literacy enables people to consume according to what they earn to avoid the unbearable burden of debt and economic crisis. Unnecessary spending can bring you close to even bankruptcy.
- People having less or no financial literacy end up paying more instead of saving more. It can include unnecessary payments for products and services.
- People buy on credit which means they have to pay for ever-increasing interest rates.
- Less financial literacy means people are not aware of investment policies. These groups of people do not invest because they have a poor understanding of terms of mortgages or loans.
- Financial illiteracy problems and their consequences are not just limited to individuals. The impact can be seen on a bigger level. Societies, communities, nations suffer economic crisis because of lack of financial education.