Mastering Your Money: Importance of Financial Literacy
Importance of Financial Literacy 1. What is financial literacy? Financial literacy refers to the ability to understand basic financial concepts and exercise right judgement in making wise financial decisions. The basic concepts we need to understand and put into practice include: financial planning, budgeting, saving, managing debts, calculating net worth, investing and estate management. 2. Why do we need financial literacy? Lack of personal financial mastery is an offshoot of financial illiteracy and is the number one cause of stress in Africa. Financial illiteracy contributes to many cases of family conflicts, marital breakdown, mismanagement of both personal and institutional/religious/gov't funds, borrowing for consumption, engaging in misguided investments etc. Financial literacy is crucial in planning one's finances by budgeting and keeping track of one's money, knowing what percentage of the total income to save, using power of leverage to make more money, mana