Am I Financially Literate?
Uploaded by scam655 on Nov 26, 2024
Am I Financially Literate?
Have you ever heard someone say, “If I had a million dollars, all my problems would be over”? Many people think that having more money would make life easier. But consider Lady Gaga. She is a millionaire many times over, but back in 2009, she was bankrupt from overspending on her Monster Ball concert tour. How did that happen? It all starts with a lack of financial literacy.
At its simplest, the term finance means the management of money. Financial literacy describes the knowledge and skills we need in order to manage our finances effectively.
“That’s fine,” you might be thinking, “for people who have money. But it doesn’t matter to me.”
Don’t sell yourself short! On average, teens in the United States spend a total of $259 billion dollars of their own money per year. No wonder advertising companies are continually trying to market to teens. They have the money to spend. However, according to a recent nationwide survey, on average, high school seniors answered only 52.4% of questions about personal finance and economics correctly. With these statistics in hand, you’re probably not surprised at the newspaper headline that read, “They like to spend it, but young people don’t know much about how money works.”
What Is Financial Literacy?
Financial literacy is important for everyone—millionaires and people who make minimum wage, kids and adults. Being financially literate enables you to plan for your future, attain your financial goals, and make sound fiscal decisions that can affect your overall well-being. Without financial education and good money management skills, it doesn’t matter how much money you make, you can still end up with no money to pay your bills or pursue your dreams.
Financial literacy is more than just having a job and earning a paycheck. It’s about what you do with your money once it’s in your hands. To be financially literate, you need to think about questions like these:
How much money do I bring in?
Where does it go?
Do I have a budget? Do I stick to it?
How much do I spend?
How much do I save?
Do I invest?
Do I borrow money? Take out loans? Use credit?
Feeling confident about answering these questions wisely is a goal of financial literacy.
Why Does It Matter?
Financial literacy also gives you the tools to survive in the world. As you grow up and earn more money, you will have to make choices about...