What is financial literacy in personal finance?

Financial literacy is the ability to understand and use money concepts well enough to make informed decisions. It includes budgeting, banking, credit, borrowing, insurance, taxes, investing, compound growth, fraud awareness and retirement planning. Financial literacy is not the same as being wealthy; it is the skill of evaluating choices, costs, tradeoffs and risks.

Practical takeaway

Use this answer as a starting point, then apply it to your own numbers, goals and constraints. For rules, product features, prices, school requirements, taxes or regulated financial decisions, verify the current details with the relevant official source.

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