Financial Literacy: Knowledge is Power
Understanding Builds Resilience
A person’s financial knowledge and their overall attitude towards money can sometimes directly affect their finances. According to a 2024 study, understanding the importance of financial literacy generally leads to greater financial well-being. The opposite is also true.1
Although you may think you have a good grasp of financial fundamentals, there may be a gap between a person’s perceived understanding and their actual knowledge of financial concepts. By learning or just brushing up on some fundamentals - such as the Rule of 72, paying down debt, the benefits of life insurance - you could have a better relationship with your money.
Being financially prepared could make all the difference in how you live each day and what your plans are for your future.
Q: How Does Financial Literacy Impact Financial Resilience?
Answer: Financial literacy and financial resilience may seem like the same thing, but they’re not. However, they are correlated.
Financial literacy is your knowledge of financial concepts such as inflation and interest rates. Being financially resilient means using your financial knowledge to build a stronger safety net that helps you manage unexpected events. So, if you’re more financially literate, you could be more financially resilient, as well.
Having financial goals and a backup plan does help prepare for the unexpected. Confidence that you can weather a financial hardship could help you feel more secure, especially during times of economic uncertainty.
Q: How Can You Improve Your Financial Literacy?
Answer: Becoming more financially knowledgeable is possible for everyone. Financial preparedness can begin by taking small steps today to improve your understanding of key fundamentals. You could take a few minutes weekly to research effective debt management tips or how to build an emergency fund. If you don’t have life insurance, and before making any major financial decisions, please seek the advice of a professional.
WFG and our agents believe in empowering people with the know-how needed to find a path to financial security, and improve their finances and understanding, regardless of their income. There is no better time to start than the present – start the process today.
1 “Financial Literacy and Retirement Fluency: New insights for improving financial well-being,” Paul J. Yakoboski, TIAA Institute; Annamaria Lusardi, Stanford University and Global Financial Literacy Excellence Center (GFLEC); Andrea Sticha, Stanford University School of Business and GFLEC; 2024.
