Financial literacy is the ability to make informed decisions about money. This includes knowing how to prepare a budget, the impact of loan terms that differ on credit and how to select investments to save for retirement.
A good understanding of financial concepts can allow people to avoid costly mistakes like excessive debt, costly investments, and a deficient credit score. They can also set aside savings to reach goals like purchasing a car, or paying for the education of their children at college. Financially educated individuals can effectively save for unexpected expenses, such as COVID-19 or home repairs and can easily access funds in times of need.
It’s no secret that a lot of Americans do not have adequate financial literacy, there are a number of ways to improve it. There are numerous online resources and apps to teach you how to manage your money. Robo-advisors can provide insight into investing strategies. Community organizations offer seminars and educational materials. It is also essential to stay up-to-date with financial news, updates, and topics to be aware of any changes to regulations or other topics of interest.
In a recent study, 38% of respondents stated that their financial apathy cost them $500 or more. To combat this problem, it’s essential to create modular financial literacy programs that allow millennials to learn at their own pace rather instead of being pushed through the entire course.
