The Importance of Financial Literacy

Hope Kannare, contributor

I believe that some, if not most of us, started working jobs at the age of sixteen in order to sustain ourselves financially. But what is financial literacy? Financial literacy is the ability to make informed and knowledgeable decisions on various financial matters including budgeting, retirement planning, taxes, investment and payments for loans.

Imagine if you had learned the importance of financial skills like managing your personal finances, budgeting, managing debt, understanding credit and more. You may have had a couple of thousands in your savings account by now.

Financial literacy is important because it contributes to every part of your life. Without money, many things would not function. Financial literacy is crucial because it provides the tools and knowledge we need to make informed decisions. Being financially illiterate may cause you to miss opportunities to save and pay off accumulated unsustainable debt burdens. 

I want you to imagine yourself in the next five years without a penny saved. How does it feel? Does it feel uncomfortable? I hope it does, because I know I would feel very uncomfortable in my late 20s without a dollar in my savings account to show for the many years of my hard work. Financial literacy empowers you to be disciplined, sets boundaries and prepares you for the unsudden.

Before I go listing ways to improve your financial literacy, ask yourself these questions: What are your top financial worries? What are the three wisest financial decisions you ever made? What major habits are preventing me from making wise financial decisions? Answer these questions truthfully, because without honesty it will be difficult to improve your financial literacy.

Actions you can take to improve your financial literacy include listening to a money-focused podcast, reading books about financial literacy, utilizing the U.S. Government’s resources for monetary support and speaking with a financial advisor. 

Knowledge is power. Use the resources you are most comfortable with first then expand your knowledge by taking notes, trying things out and asking questions. I think I can safely say most people think they are not creative, yet they are unique. Understanding your finances is unique and creative.