The concept of financial literacy is well-known, but you may not be aware that this represents a huge issue in the UK.
According to research conducted by the UCL Institute of Education (IOE) in 2018, one-in-three adults in England and Northern Ireland cannot even work out the correct change from a shopping trip, highlighting a huge and potentially seismic gap in knowledge.
But what exactly is financial literacy, and how can it benefit you throughout your life? Let’s find out.
What is Financial Literacy?
In simple terms, financial literacy describes a confluence of financial, credit and debt management knowledge that contributes to our fiscal decisions.
From choosing the best mortgage to take out to comprehending the impact of interest on loan repayments, financial literacy is integral to our everyday lives and ability to secure financial stability in the future.
This is why the concept is so important, as it has a deceptively significant impact on our day-to-day existence, even extending to how we understand checking accounts, balance our monthly budgets and fund necessary expenses.
Financial literacy is actually so important that it was officially mandated as a part of the UK national curriculum in 2013, although it has since been reported that four out of five students feel as though they aren’t receiving the necessary education in this respect.
How Can Financial Literacy Benefit Your Life?
When you gain knowledge across a broad range of financial markets and products, you start to understand the value of money. This is of huge benefits, especially when considering the precise terms and conditions of loans and similar products.
For example, financial literacy enables you to evaluate a loan offer accurately, taking into consideration both the interest rate and the precise amount that you’ll have to pay back within the agreed time period.
Financial literacy also teaches broader lessons about the importance of saving money and accumulating wealth, which can in turn prevent you from getting into debt over a sustained period of time.
On a similar note, this way of thinking may also encourage you to learn more about various investment markets, from stocks and bonds to derivative assets such as currency pairings.
By accessing your chosen markets through a low-spread forex broker, you’ll also lay the foundation from which you can diversify your interests and earnings going forward. With a keen sense of financial literacy, you can hopefully make informed decisions about your selected asset classes and brokerage platforms too, helping you to save money and maximise returns in the process.
As we can see, financial literacy helps us to make informed and beneficial fiscal decisions throughout our lives. Additionally, it boosts wider society and contributes to a stronger and more sustainable economy.
