Sunday, 29 March 2020

What Is Financial Literacy, Why Is It Important?

For the first time in the mid-1990s, financial literacy and financial education concepts became a key priority for many countries around the world.

Nowadays, you may hear the concept of “financial literacy” in many places. But what is financial literacy and why is it important? Here's what you need to know about financial literacy.

What is Financial Literacy?
Financial literacy is a concept that expresses having the necessary knowledge and skills to make financial decisions responsibly and accurately.

Financial literacy requires knowing and understanding the basics of personal finance and money management. However, it is also very important that personal finance and money management can be actively implemented in daily financial life.

For example, it is not enough to have information to be financial literate. This information needs to be applied and used responsibly and accurately, to overcome financial difficulties and achieve financial goals.

Why Financial Literacy Matters?
Given that money and the economy play a vital role in our daily life, it is important that everyone has at least basic knowledge of financial literacy.

Given situations like building a home, buying a new home or buying a car and retirement, we can say that our lives are full of financially important decisions.

At this point, it is extremely important for people to have knowledge and skills about the financial decisions they make or make and to know how to deal with the possible consequences of these decisions. This is only possible with financial literacy.

Therefore, financial literacy is important for people to make the right financial decisions, achieve prosperity and financial goals, and contribute to the financial health of society as a whole.

What are the Advantages of Financial Literacy?
Financial literacy is a basic life skill that every individual needs. It helps you understand the basics of economics, personal finance and money management and apply these concepts in your daily life.

So, what advantages does being financial literate provide? Here are the biggest advantages of financial literacy and what you can do with financial literacy:

You can evaluate your financial decisions correctly. Everything from small shopping to large investments is included in these decisions.
You can gain basic money management skills. You can reach your financial goals by starting to manage your money properly.
Turkey or the world economy, interest rates, understands financial issues such as mortgages and loans, you can expand your perspective and make comments on these issues.
You can recognize all investment tools and make sure decisions about how you should use your money.
You can have financial freedom to stay financially stable and live.
Finally, by acquiring all this knowledge and skills, you can join the community as a knowledgeable and responsible citizen. You can increase the financial literacy by raising awareness of your family members or your environment.

Where to Start Financial Literacy?
You can develop your own knowledge and skills in financial literacy. You can also attend financial literacy training in your city, read books, or take advantage of free personal finance resources such as Konupara .

There are eight main topics that form the basis of financial literacy. You can examine these issues and concentrate on topics that you think your knowledge and skills are weak. So you start somewhere. (In the meantime, you can go to the relevant link for a financial literacy test of 20 questions where you can measure your level of knowledge .)

You should have knowledge and skills for financial literacy:

Budget. Understanding your daily money management issues represents your knowledge and skills. It includes concepts such as income, expenses and monthly payments.

Accumulation. It is the knowledge and skills you need to make investments and savings. This means that you can understand and apply the subject concepts to investment instruments such as deposit accounts, interest, and securities.

Request and Requirements Management. It is your ability to understand and meet your indispensable needs such as food, shelter and transportation. In order to be successful, it is important to understand the demand-need distinction. Spending for groceries today is a need, but replacing your working smartphone with a top model is probably not a need, but a request.

Banking. It expresses fine details of the management of your accounts. This means that you should be able to understand your accounts, how they work, and current costs or conditions.

Insurance. Health insurance requires understanding products such as life insurance or theft insurance. Exemptions and coverage levels in insurance are among the issues to be addressed.

Debt Management. It is your ability to take credit, use credit cards and keep your debts under control. Necessary conditions, expenses and interest rates are included in debt management.

Credit Management. Keeping your credit rating at a good level requires knowledge and skills. For example, if your credit rating has dropped, you should know how to deal with this problem.

Pension. It involves many of the above topics, such as budget and savings in general, and requires you to understand more specific tools, such as private pensions.

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