What is Meant by "Financial Literacy?"
February, 2006
The term “Financial Survival” is very broad and general and probably means something
different to every person hearing or reading this material. In the context of this
article it spans all the topics of financial matters in a person’s life, including
personal finances, business finances, investment topics and local, national and global
economics. The term to be used throughout this series of articles pertaining to
acquiring knowledge of various financial subjects will be “Financial Literacy”.
“Personal financial literacy” includes everything related to how you earn money, how
much you get to keep after you have paid all your various taxes, how you spend it, and
what you do with any surplus after paying your obligations. The last item, what you do
with the surplus, gets into the area of investments and retirement savings, each of
which falls under a completely separate topic.
The subject of Personal financial literacy can be conveniently separated into major
topics such as income, various types of taxation and expenses. The discussion of these
topics will be expanded in later sections.
“Business financial literacy” relates to any business you operate. If you are strictly
an employee of a company not owned by you, this topic is interesting, but not completely
relevant to your personal survival, except as it relates to the financial health of the
company which employs you. However, it is important if you derive your income from your
own business, or if you have a sideline business that you operate in addition to being
a full-time employee of someone else, frequently called “moonlighting”.
“Investment literacy” is the topic related to what you do with your surplus funds,
those left over after paying your ongoing taxes, living expenses and other obligations.
The subject of investing for various goals, such as children’s college funds and your
own retirement needs, requires very specialized advice for specific recommendations.
This series of articles will discuss investments in broad generalities only, to
enlighten the reader about the differences in available investment options, but
will not involve any investment advice.
“Economics literacy” discussions will address larger movements on a scale beyond one’s
personal issues. The reader should become familiar with forces outside his or her own
personal life and control, in order to assess the impact on their financial lives.
Whether you are an employee of a company you do not own, or an owner of your own company,
there are outside forces are work at all times affecting your future and your survival.
They should not be ignored, just because you think there will be no immediate impact
on your life and business.
Want to do a quick assessment of your level of "economic literacy"? Take a quick
quiz published and copyrighted by the Washington Post newspaper. The answers are
provided and are accessible when you finish the quiz and click on "answers".
Go
HERE for the quiz, and come back here to the articles.
Select a topic from the column on the left to proceed to a different article.
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