What does financial literacy enable an individual to do?

Financial literacy enables an individual to be an informed consumer and manage finances effectively by equipping them with the knowledge and skills necessary to understand financial concepts, evaluate financial products, and make informed decisions regarding budgeting, saving, investing, and borrowing. This understanding allows individuals to navigate their financial lives more confidently, avoid pitfalls like excessive debt, and make choices that align with their personal financial goals.

While managing household debts effectively and understanding complex economic systems are important aspects of financial literacy, they do not encompass the full range of skills that financial literacy provides. Furthermore, the ability to invest only in stocks and bonds represents a limited view of investment opportunities, as financial literacy encourages individuals to consider a wider range of investment options and assess risk based on their personal circumstances.