What is Financial Literacy and Why is it Important?

What is Financial Literacy and Why is it Important?

We hear a lot about financial literacy programs and campaigns, but what exactly is it? Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. It forms the basis of your relationship with money and grows with your experience in dealing with financial matters. It impacts your ability to qualify for credit, to plan for future purchases, and your ability to build wealth.

Financial literacy is important in various aspects of your life. Creating a sustainable budget informs your purchases and helps you manage debt. Managing your debt appropriately will allow you to borrow money at reasonable rates. Borrowing money at reasonable rates will allow you to make major purchases like a car or a home. This is a general idea of how your financial decisions work together, but there are more complex parts of your financial life that can determine your level of financial freedom.

Financial education fosters financial stability for individuals and for entire communities. The more people know about personal financial management, the more likely they are to increase savings, buy homes, and improve their overall financial health and well-being. Studies conducted by the Jump$tart Coalition for Personal Financial Literacy found that states with high numbers of adults declaring personal bankruptcy also have high numbers of 12th graders who are financially illiterate. In addition, a national survey commissioned by the Consumer Federation of America (CFA) and Financial Planning Association (FPA) indicates that less than one-half of Americans have developed a financial plan, while the number of people who worry about their personal finances has increased.

As a community bank, M&F Bank has a mission to provide financial literacy to create strong individuals, families, businesses, and communities. We hope that by exploring Smart Money Habits you are able to take these concepts and apply them to your life in a way that allows you to be prosperous.

We hear a lot about financial literacy programs and campaigns, but what exactly is it? Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. It forms the basis of your relationship with money and grows with your experience in dealing with financial matters. It impacts your ability to qualify for credit, to plan for future purchases, and your ability to build wealth.

Financial literacy is important in various aspects of your life. Creating a sustainable budget informs your purchases and helps you manage debt. Managing your debt appropriately will allow you to borrow money at reasonable rates. Borrowing money at reasonable rates will allow you to make major purchases like a car or a home. This is a general idea of how your financial decisions work together, but there are more complex parts of your financial life that can determine your level of financial freedom.

Financial education fosters financial stability for individuals and for entire communities. The more people know about personal financial management, the more likely they are to increase savings, buy homes, and improve their overall financial health and well-being. Studies conducted by the Jump$tart Coalition for Personal Financial Literacy found that states with high numbers of adults declaring personal bankruptcy also have high numbers of 12th graders who are financially illiterate. In addition, a national survey commissioned by the Consumer Federation of America (CFA) and Financial Planning Association (FPA) indicates that less than one-half of Americans have developed a financial plan, while the number of people who worry about their personal finances has increased.

As a community bank, M&F Bank has a mission to provide financial literacy to create strong individuals, families, businesses, and communities. We hope that by exploring Smart Money Habits you are able to take these concepts and apply them to your life in a way that allows you to be prosperous.

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