6.14 Financial Literacy

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What is Financial Literacy?

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Financial Literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.

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Why is budgeting important?

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Budgeting helps individuals plan their spending, save money, and manage their finances effectively to avoid debt.

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What is a savings account?

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A savings account is a bank account that earns interest on the money deposited, allowing individuals to save money securely.

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What does it mean to invest?

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Investing means putting money into financial schemes, shares, or property with the expectation of achieving a profit.

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What is the difference between needs and wants?

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Needs are essential items required for survival (like food and shelter), while wants are non-essential items that enhance quality of life (like luxury items).

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What is interest?

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Interest is the cost of borrowing money or the earnings from saving or investing money, usually expressed as a percentage.

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What is a credit score?

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A credit score is a numerical representation of a person's creditworthiness, indicating how likely they are to repay borrowed money.

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What is the purpose of insurance?

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Insurance is a financial product that provides protection against financial loss or risk, helping individuals manage unexpected events.

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What is a loan?

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A loan is a sum of money borrowed that is expected to be paid back with interest over a specified period.

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What does it mean to live within your means?

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Living within your means means spending less than or equal to your income, avoiding debt, and saving for future needs.