What is the purpose of financial literacy?

The purpose of financial literacy is fundamentally to empower individuals to make informed financial decisions. Financial literacy encompasses the knowledge and skills necessary to manage financial resources effectively, understand financial products, and plan for the future. When individuals are financially literate, they are better equipped to budget, save, invest, and navigate financial challenges, leading to improved financial stability and overall well-being.

Fostering financial literacy helps individuals to comprehend important concepts such as interest rates, credit scores, and the implications of taking on debt. This education enables people to recognize their personal financial situation, set realistic goals, and create strategies to achieve those goals, ultimately leading to better financial outcomes.

Understanding the broader implications of financial literacy also highlights the importance of informed consumers in the economy. When people make educated choices, it contributes to stronger financial institutions and a more stable economy, benefitting society as a whole.