In past generations, cash was used for most daily purchases; today, it’s rarely flashed – particularly not by younger shoppers. The way we shop has changed as well. Online shopping has become the top choice for many, creating ample opportunities to use and overextend credit – an all-too-easy way to accumulate debt, and fast.
Meanwhile,creddit card companies, banks and other financial institutions are inundating consumers with credit opportunities – the ability to apply for credit cards or pay off one card with another – and without the proper knowledge or checks and balances, it is easy to get into financial trouble.
Many consumers have had very little understanding of finances, how credit works and the potential impact on their financial well-being for many, many years. In fact, the lack of financial understanding has been signaled as one of the main reasons behind savings and investing problems faced by many.
What Is Financial Literacy?
Financial Literacy is the confluence of financial, credit and debt management and the knowledge that is necessary to make financially responsible decisions – decisions that are integral to our everyday lives. Financial literacy includes understanding how a checking account works, what using a credit card really means, and how to avoid debt. In sum, financial literacy impacts the daily isues an average family makes when trying to balance a budget, buy a home, fund the children’s education and ensure an income at retirement.