How can financial literacy be defined?

Financial literacy can be defined as the understanding and application of personal finance principles that enable individuals to make informed and effective financial decisions. This encompasses a broad range of topics including budgeting, saving, investing, understanding credit, managing debt, and planning for retirement. A person who possesses financial literacy has the skills and knowledge to assess their financial situation, set goals, and develop plans to achieve those goals.

The emphasis on applying these principles illustrates that financial literacy is not just about knowledge, but also about taking action based on that knowledge to improve one's financial health. This approach brings together various aspects of finance, allowing individuals to navigate complex financial landscapes and make choices that align with their personal values and goals.