Financial Literacy involves an individual’s ability to interpret and understand basic financial concepts apply that knowledge to make informed decisions. Financial literacy is more than a measure of knowledge – it also reflects competency in actively managing one’s own money from the point of accumulation to the point of consumption (Remund, 2010). Many researchers define financial literacy as “the ability to make informed and efficient regarding the use and management of money” (Schagen and lines, 1996). Financial literacy is essential than ever in today’s world.
It perceived as a very beneficial tool to see how a particular person copes with financial problems. Being aware of money management, budget, borrowing, saving, spending and financing can prepare today’s generation with knowledge to take charge of their finances. If the individuals are confident with financial literacy, they might handle the financial problems better.
We are living in a generation of unusual debt and students are intended to face financial problems in through their journey. It is important that educators and parents begin to equip young individuals with the knowledge and skills they needed to succeed as consumers in today’s global economy. Governments provide attention to financial literacy of their society in order to constitute policies, and solve the financial problems of the society.
Also by using financial literacy it can help assess the information from different countries, in that way it is possible to make comparisons. Every country can learn from different countries if the financial literacy levels between these countries similar or differ to each other. College students are not receiving the financial knowledge necessary to be successful in today’s fast paced economy. Due to an increasingly complex marketplace, college students need greater knowledge about their personal finances and the economy. The financial decisions made early in life create habits difficult to break and affect students’ ability to become financially secure adults.
Most recent studies show average personal financial scores declining with average scores close to a failing grade (Jorgensen, 2007). It is valuable for College students to know the value of money, for them to understand how it performs and how to manage it wisely. Every student must gain financial knowledge while they were still young for them to manage their finances efficiently.
This knowledge obtained by the students will help them make decisions on how they suppose to handle and use money to their daily life. Being aware to your finances is one of the best decisions to assure and to keep your finances. Spending, saving, ; budgeting are some example on how to manage your money or finances. But in today’s economy, it is slight impossible to spend, to save, and to budget your money because of inflation. We are living in a place where the prices in the market are getting higher.
So, education and knowledge about financial literacy is a big help on how to use your money effectively.. As an individual you must understand the concept of financial literacy, so that you can make wise decision on how to manage your money. This skill is very important because some individuals do not know this basic knowledge and they are unable to meet their financial expenses.It is important to focus on improving the financial management skills, attitudes and behaviors right from the start of the college experience as financial issues and the need to work are often cited as the number one reason why students drop out of college (Ross, et al., 2012).