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Top 4 Reasons Why Financial Literacy is Important

Artificial Intelligence

Business Intelligence

Digital Intelligence

All these ring some bells in your mind as we often hear them a lot time these days. But, there is one more that we hear rarely but it is equally important i.e. Financial Intelligence.

In fact, financial intelligence or financial literacy is more important as it is estimated that 80% people problem is directly or indirectly related to money.

Money is everything!

And, who does not want to earn money and live a life that they’ve dreamt off. But, in order to do that, you need to know how money works. You need to be aware of how to manage your finances and make smarter decisions. The smarter you’re, the better chance you’ll have to beat the odds in the market.

A research indicates that there are many people including the entrepreneurs who don’t have an adequate financial knowledge nor they understand the power of compound interest. 

What is Financial Literacy?

Financial literacy is the ability of an individual to understand how make sound financial decisions so that you can confidently manage your finances. It is very important to have an in-depth knowledge of finance to have money work for you – even while you’re sleeping. Financial literacy also means having enugh knowledge of various financial terms, financial statements, and concepts. And, it also means how to use this information to make a financial impact in your life.

All this is possible if you’re financially literate. This is the best investment you can give to yourself and it is an obvious starting point to build a wealth.

Being financially literate allows you to allocate your money towards various goals that you set to love a peaceful and a happy life.

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Why is it Important to be Financial Literate?

Here’re four reasons why financial literacy or financial intelligence is important if you want to make more money:

#1.  Grow your wealth

Is there anyone who wants to increase their wealth?

Ask anyone this question and they’ll give you a surprising look. For many people whether you own a business or not, the most important thing you should know is how and where you money flows. This is one of the important factors why rich become richer because they know where they money is going and have a complete control on the cash flow. Once you’re aware about the cash flow, you’ll be able to spot where the money is going. This will automatically help you to grow your wealth in the long run.

#2. Protects you from having too much debt

Imagine yourself surrounded by too much debt in your life. If you’re financially literate or know about how money works then you will be clearly differentiate between asset and liabilities. And, you will also be able to clearly determine how much loan you need and whether you will be able to afford to pay back the loan. Having financial knowledge will help you to secure yours’ or your family’s future keeping your debt free throughout your life.

#3. Helps you to understand budgeting

If you’re financially literate, you know how to save money in an organized manner. It is important that you understand how much income you’re taking and distribute it effectively to pay for your expenses and get rid of the debt. All this is possible if you’re financially literate and have an understanding of money management.

#4. Plan for your retirement

It is also important to save for your retirement as that should be your concurrent long-term goal. When you’re financially literate, you’re able to calculate how much corpus you need for your retirement and what types of accounts will help you to get there.


Hence, financial literacy is not just a luxury but it also has become a necessity especially in today’s world. You need to understand money management as it will help you to feel in control in your finances.

And, financial literacy also helps you to attain financial freedom so that you can focus all your energies on other important tasks. It helps you to take up something that you wanted to do but couldn’t or spend time with your family and friends.

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