What does the term 'financial literacy' refer to?

The term 'financial literacy' refers to an individual's understanding of various financial concepts and skills that are essential for making informed decisions about personal finances. This includes being knowledgeable about budgeting, saving, investing, debt management, and understanding financial instruments such as loans and credit. Financial literacy empowers individuals to navigate the complexities of managing their money, which is crucial for achieving financial stability and independence.

While the other choices address specific aspects of financial behavior or activities, they do not encompass the broader definition of financial literacy. For instance, investing in the stock market is one component of financial literacy, but it does not cover the entire spectrum of skills and knowledge needed to be financially literate. Similarly, managing a company's funds pertains to corporate finance rather than personal financial literacy, and while saving money effectively is an important skill, it is just one part of the overall understanding required to be financially literate. Thus, the correct answer captures the comprehensive nature of financial literacy as it encompasses the foundational knowledge needed to successfully manage finances in a wider context.