financial literacy
Sign in to saveAlso known as financial capability, personal finance education, financial education, personal financial literacy
possession of skills and knowledge to make informed and effective personal financial decisions
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Financial literacy is the possession of skills, knowledge, behavior, and attitude that allow an individual to make informed decisions regarding money. Financial literacy, financial education, and financial knowledge are used interchangeably. Financially unsophisticated individuals cannot plan for their future because of their poor financial knowledge. Financially sophisticated individuals are good at financial calculations; for example they understand compound interest, which helps them to engage in low-credit borrowing. Most of the time, unsophisticated individuals pay high costs for their debt borrowing.
Excerpted from Wikipedia’s “financial literacy” article, available under the CC BY-SA 4.0 licence.