Financial literacy is the ability to understand and apply various financial skills effectively, such as budgeting, saving, investing, and managing debt. It involves a basic understanding of financial concepts like income, expenses, interest rates, and the value of money over time. Financial literacy empowers individuals to make informed and responsible decisions about their finances, helping them achieve goals, avoid financial stress, and plan for long-term stability.

It encompasses the knowledge needed to navigate financial tools and products like credit cards, loans, and retirement accounts. Financial literacy is not just about earning money but also about managing it wisely to secure a better quality of life and financial independence.