An increased attention to financial literacy was triggered by the 2008 global financial crisis, which highlighted the importance of financial knowledge and skills for consumers. Financial literacy entails more than mere understanding of the terms "financial" and "literacy". A financially literate person is someone who comprehends financial calculations and displays financial capability to discern good from bad financial decisions and the ability to combine that with sound financial behaviour in the pursuit of sustainable financial well-being.
Financial decisions and well-being are influenced by a range of factors such as age, gender, race, education, social context, income, sources of financial advice and information, characteristics of the market, etc. So, a person needs more than just financial literacy to achieve financial well-being; it requires sufficient income, availability of suitable financial products, and appropriate regulations devoted to protecting people from their own financial illiteracy and inability to make informed financial decisions. Indeed, unsophisticated consumers may not appreciate and take advantage of the many opportunities offered by the complex financial markets, which leaves them at the mercy of frauds.
And since most young adults are regarded as financially unsophisticated, this further highlights the need for their financial literacy to be improved. While it is vital for individuals to be financially literate and to know how to avoid the risks and the traps of financial products and services, it is the obligation of governments to make sure that financial products and services are safe and regulated to better protect consumers with appropriate legislations in today’s highly sophisticated market; specify uniform standards for financial products. It is about building a system of individual responsibility whereby individuals make important financial decisions instead of financial professionals doing it indirectly on behalf of individuals. Learn more !