Financial Literacy
Knowledge Is Power
A person’s financial knowledge and their overall attitude towards money can sometimes directly affect their finances. According to a recent study, greater financial literacy generally means greater financial well-being, while the opposite is also true.1
Although you may think you have a good grasp of financial fundamentals, there may be a gap between a person’s perceived understanding and their actual knowledge of financial concepts. By learning or just brushing up on some fundamentals - such as the Rule of 72, paying down debt, the benefits of life insurance, - you could have a better relationship with your money.
Being financially prepared could make all the difference in how you live each day and what your plans are for your future.
How Financial Literacy Impacts Financial Resilience
Financial literacy and financial resilience may seem like the same thing, but they’re not. However, there is a correlation between the two.
Financial literacy is your knowledge of financial concepts such as inflation and interest rates. Being financially resilient means you have used your financial knowledge to help create a stronger safety net to help you manage any unexpected events that may come up. So, if you’re more financially literate you could be more financially resilient, as well.
Having financial goals and a backup plan does help prepare for the unexpected. Confidence that you can weather a financial hardship could help you feel more secure, especially during times of economic uncertainty.
You Can Improve Your Financial Literacy
Becoming more financially knowledgeable is possible for everyone. You can begin taking small steps today to improve your understanding of key fundamentals. You could take a few minutes weekly to educate yourself on effective debt management or how to build an emergency fund. If you don’t have life insurance, and before making any major financial decisions, please seek the advice of a professional.
WFG and our agents believe in empowering people with the know-how needed to find a path to financial security, and improve their finances and understanding, regardless of their income. There is no better time to start than the present – start the process today.
1“Financial Literacy and Retirement Fluency: New insights for improving financial well-being,” Paul J. Yakoboski, TIAA Institute; Annamaria Lusardi, Stanford University and Global Financial Literacy Excellence Center (GFLEC); Andrea Sticha, Stanford University School of Business and GFLEC; 2024.