What is Financial Literacy?

 

Financial literacy is the ability to understand finance. 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.”  Personal Finance is the ability to apply your financial literacy skills to your own situation.  It more than just being able to balance a checkbook, although since online-bill pay, how many people still utilize a checkbook.   Learning about money and how it works is an important aspect, as is understanding products like credit, loans, and insurance.  It also includes skills like long-term vision and planning for the future, and the discipline to use those skills every day.

In the US, we make great efforts to teach children to read and write, but we don’t give their financial literacy the same attention. As a result, few young people know how to to manage their personal financial lives.  Rich Dad, Poor Dad by Robert Kiyosaki is a great resource to learn about the importance of financial literacy.  You can also find some great resources for teaching kids about personal finances at Practical Money Skills.

In this video, we focus on how to become financially literate with regards to the stock market.  We discuss key vocabulary terms that any trader should know.  We also discuss the basics of trading.

Watch the Video Below to learn more about What is Financial Literacy: