Financial literacy can help individuals reach their goals: By better understanding how to budget and save money, individuals can create plans that set expectations, hold them accountable to their finances, and set a course for achieving seemingly unachievable goals.Though losing a job or having a major unexpected expense are always financially impactful, an individual can cushion the blow by implementing their financial literacy in advance by being ready for emergencies. Financial literacy prepares people for emergencies: Financial literacy topics such as saving or emergency preparedness get individuals ready for the uncertain.Financial literacy helps individuals avoid making mistakes with their personal finances. Seemingly innocent financial decisions may have long-term implications that cost individuals money or impact life plans. Financial literacy can prevent devastating mistakes: Floating rate loans may have different interest rates each month, while traditional individual retirement account (IRA) contributions can’t be withdrawn until retirement.A 2021 survey by the Federal Reserve Bank of San Francisco revealed that 28% of all payments were via credit card, with only 20% being made in cash. residents may have purchased goods primarily in cash, various credit products are popular today, such as credit and debit cards and electronic transfers. Financial literacy can be obtained through reading books, listening to podcasts, subscribing to financial content, or talking to a financial professional.įrom about 2000 to 2022, financial products and services have become increasingly widespread throughout society.Key aspects to financial literacy include knowing how to create a budget, plan for retirement, manage debt, and track personal spending.A strong foundation of financial literacy can help support various life goals, such as saving for education or retirement, using debt responsibly, and running a business.People who are financially literate are generally less vulnerable to financial fraud.The term “financial literacy” refers to a variety of important financial skills and concepts.
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