Financial literacy refers to his or her ability to understand money matters in a way that allows them to make sound decisions. This includes knowing how to set up a budget, the impact of loan terms that differ on credit and the best investments to save for retirement.

A good understanding of financial concepts can allow people to avoid problems such as excessive debt, expensive investments, or a weak credit score. It also allows them to build savings and pursue goals like purchasing a brand new car or paying for their children’s college education. People who are financially educated can also save money for unexpected expenses, such as COVID-19s, home repairs, and have the ability to get money when they need it in an emergency.

It’s no secret that Americans aren’t awash in financial literacy. However, there are ways to improve this. There are many online resources and apps that teach money management. Robo-advisors provide insight into investing strategies. Community organizations offer workshops and educational material. It is also essential to stay current with financial news, updates and topics to be aware of any changes in regulations or other topics of interest.

A recent study found that 38% of respondents reported that their financial literacy was lacking. This could have cost them $500 or more. To combat this issue, it is 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.