Financial Literacy and Why It Matters

Topics: Investment, Personal finance, Finance Pages: 2 (473 words) Published: March 7, 2013
Financial Literacy is the knowledge and understanding of financial matters. Financial literacy is mainly used in connection with personal finance matters. It understands the basic personal financial management skills, including understanding of income, money management, saving, investing and spending. Gives you the ability to make critical financial decisions. Knowing how to manage money, use credit effectively and wisely, build wealth, and make good financial decisions.

Financial literacy among individuals results in more stable communities. Improved financial literacy, particularly early in life, results in a higher standard of living over the long term until the retirement. Gaining financial literacy is a long-term process that, for most people, requires the assistance of institutions outside the home. Money management has a lot to do with our personal value systems and sense of responsibility.  And teaching some of these concepts is more complicated than mathematics, and involves understanding people, their motivations and their psychology.  Understanding money means understanding that it is one of the most powerful motivators in life. 

Here in the Philippines, starting from teenagers should know and learn what is financial literacy. Teenagers, students, working students started to have income and credit cards. They should know more how to deal with money and have savings for their future. They should be taught at their age because they don’t know enough. Today teenagers have little understanding of finance and economics. They are spending and borrowing without knowing that interest builds up, or that credit cards aren’t free money. They start saving later. More kids are taking their time in school, in malls, spending their savings to get what they want. If they learn the importance of saving and investing in high school or college, it will encourage them to get started earlier, and to work harder to avoid ”taking their time” in college. There are...
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