Financial Literacy Definition
The financial literacy definition developed by the National Financial Educators Council:
Possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual’s personal, family and global community goals.
How Can We Improve Our Definition of Financial Literacy?
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Please note, we are using term “financial literacy” definition loosely. Personal finance takes more than just “literacy” to help people. Our focus is on molding positive financial behaviors and encouraging people to adopt money management processes that help them achieve their financial goals. Please consider these points when contributing.
Personal finance describes the principles and methods that individuals use to acquire and manage income and assets. Financial literacy is the ability to use knowledge and skills to manage one’s financial resources effectively for lifetime financial security. Financial literacy is not an absolute state; it is a continuum of abilities that is subject to variables such as age, family, culture, and residence. Financial literacy refers to an evolving state of competency that enables each individual to respond effectively to ever-changing personal and economic circumstances.
The ability to make informed judgments and to take effective actions regarding the current and future use and management of money. It includes the ability to understand financial choices, plan for the future, spend wisely, and manage the challenges associated with life events such as a job loss, saving for retirement, or paying for a child’s education.
– The Government Accounting Office (GAO)
The combination of knowledge, skills, attitudes and ultimately behaviors that translate into sound financial decisions and appropriate use of financial services.
– The Center for Financial Inclusion
The President’s Advisory Council on Financial Literacy defines personal financial literacy as “The ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.
– The President’s Advisory Council on Financial Literacy