Why Is Financial Literacy Important?

Many of us really don’t know what personal finance is. We thought that having savings is already enough, however, if we are going to look at the definition of personal finance, it is more than that.
According to Wikipedia, personal finance is the financial management which an individual or a family unit performs to budget, save, and spend monetary resources over time, taking into account various financial risks and future life events or to better understand it, personal finance defines all financial decisions and activities of an individual or household including budgeting, insurance, mortgage planning, savings and retirement planning (Investopedia).

Personal finance is about proper money management in all aspects that will lead you to financial freedom or being financially stable. And to be able to understand this further, one needs to be financially literate. Financial literacy is having the knowledge of understanding financial matters and making proper decisions pertaining to certain personal finance matters like real estate, insurance, investing, saving, tax planning and retirement. It involves understanding financial concepts like compound interest, financial planning, advantageous savings methods, time value of money, etc. (Investopedia) So now we know what personal finance is. Some people think it is only for the rich but it’s not. Some people think it’s difficult because of their meager income but they are totally wrong. Most of us don’t really care but we should at least learn the basics because one of these days, you will thank yourself for it.


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