financial literacy reflection essay

Essay on Financial Literacy for Students and Children

Importance of financial literacy, an introduction to financial literacy.

We go to schools, colleges, universities to complete our educated and start earning our livelihood. We take up jobs, practise professions or start our own businesses so that we can earn money to make our living. But which of these institutions make us capable of managing our own hard-earned money? Probably a very few of them.

Our ability to effectively manage our money by drawing systematic budgets, paying off our debts, making buying and selling decisions and ultimately becoming financially self-sustainable is known as financial literacy.

Financial literacy is knowing the basic financial management principles and applying them in our day-to-day life.

Financial Literacy – What does it Involve?

From simple practices like keeping a track of our expenses and understanding the need to spend money if we like a product to striking a balance between the value of time saved and money lost, paying our taxes and filing of tax returns, finalizing the property deals, etc – everything becomes a part of financial literacy.

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As human beings, we are not expected to know the nitty-gritty of financial management. But managing our own money in a way that it does not affect us and our family in a negative way is important. We certainly do not want to end up having a day with no money at hand and hunger in our stomach.

Why is Financial Literacy so Important?

Financial literacy can enable an individual to build up a budgetary guide to distinguish what he buys, what he spends, and what he owes. This subject additionally influences entrepreneurs, who incredibly add to financial development and strength of our economy.

Financial literacy helps people in becoming independent and self-sufficient. It empowers you with basic knowledge of investment options, financial markets, capital budgeting, etc.

Understanding your money mitigates the danger of facing a fraud-like situation. A few strategies are anything but difficult to accept, particularly when they’re originating from somebody who is by all accounts learned and planned. Basic knowledge of financial literacy will help people with foreseeing the risks and argue/justify with anyone learned and well-informed.

What should you read on / get informed about in Financial Literacy?

Budgeting and techniques of budgeting
Direct and indirect taxation system
Direct tax slabs
Income and expense tracking
Loans and debt – EMI management
Interest rate systems: fixed versus floating
Business and organisational transaction studies
Elementary Book-keeping and Accountancy
Cash in-flow and out-flow Statements
Investment & personal finance management
Asset management:
Business negotiation skills and techniques
Make or buy decision-making
Financial markets
Capital structure – owner’s funds and borrowed funds
Fundamentals of Risk Management
Microeconomics and Macroeconomics fundamentals

While there are various media to learn about financial literacy, we recommend that you join a short-term, weekend programme which helps you get financially literate.

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Open access
Published: 24 January 2019

Financial literacy and the need for financial education: evidence and implications

Annamaria Lusardi 1

Swiss Journal of Economics and Statistics volume 155 , Article number: 1 ( 2019 ) Cite this article

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1 Introduction

Throughout their lifetime, individuals today are more responsible for their personal finances than ever before. With life expectancies rising, pension and social welfare systems are being strained. In many countries, employer-sponsored defined benefit (DB) pension plans are swiftly giving way to private defined contribution (DC) plans, shifting the responsibility for retirement saving and investing from employers to employees. Individuals have also experienced changes in labor markets. Skills are becoming more critical, leading to divergence in wages between those with a college education, or higher, and those with lower levels of education. Simultaneously, financial markets are rapidly changing, with developments in technology and new and more complex financial products. From student loans to mortgages, credit cards, mutual funds, and annuities, the range of financial products people have to choose from is very different from what it was in the past, and decisions relating to these financial products have implications for individual well-being. Moreover, the exponential growth in financial technology (fintech) is revolutionizing the way people make payments, decide about their financial investments, and seek financial advice. In this context, it is important to understand how financially knowledgeable people are and to what extent their knowledge of finance affects their financial decision-making.

An essential indicator of people’s ability to make financial decisions is their level of financial literacy. The Organisation for Economic Co-operation and Development (OECD) aptly defines financial literacy as not only the knowledge and understanding of financial concepts and risks but also the skills, motivation, and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial well-being of individuals and society, and to enable participation in economic life. Thus, financial literacy refers to both knowledge and financial behavior, and this paper will analyze research on both topics.

As I describe in more detail below, findings around the world are sobering. Financial literacy is low even in advanced economies with well-developed financial markets. On average, about one third of the global population has familiarity with the basic concepts that underlie everyday financial decisions (Lusardi and Mitchell, 2011c ). The average hides gaping vulnerabilities of certain population subgroups and even lower knowledge of specific financial topics. Furthermore, there is evidence of a lack of confidence, particularly among women, and this has implications for how people approach and make financial decisions. In the following sections, I describe how we measure financial literacy, the levels of literacy we find around the world, the implications of those findings for financial decision-making, and how we can improve financial literacy.

2 How financially literate are people?

2.1 measuring financial literacy: the big three.

In the context of rapid changes and constant developments in the financial sector and the broader economy, it is important to understand whether people are equipped to effectively navigate the maze of financial decisions that they face every day. To provide the tools for better financial decision-making, one must assess not only what people know but also what they need to know, and then evaluate the gap between those things. There are a few fundamental concepts at the basis of most financial decision-making. These concepts are universal, applying to every context and economic environment. Three such concepts are (1) numeracy as it relates to the capacity to do interest rate calculations and understand interest compounding; (2) understanding of inflation; and (3) understanding of risk diversification. Translating these concepts into easily measured financial literacy metrics is difficult, but Lusardi and Mitchell ( 2008 , 2011b , 2011c ) have designed a standard set of questions around these concepts and implemented them in numerous surveys in the USA and around the world.

Four principles informed the design of these questions, as described in detail by Lusardi and Mitchell ( 2014 ). The first is simplicity : the questions should measure knowledge of the building blocks fundamental to decision-making in an intertemporal setting. The second is relevance : the questions should relate to concepts pertinent to peoples’ day-to-day financial decisions over the life cycle; moreover, they must capture general rather than context-specific ideas. Third is brevity : the number of questions must be few enough to secure widespread adoption; and fourth is capacity to differentiate , meaning that questions should differentiate financial knowledge in such a way as to permit comparisons across people. Each of these principles is important in the context of face-to-face, telephone, and online surveys.

Three basic questions (since dubbed the “Big Three”) to measure financial literacy have been fielded in many surveys in the USA, including the National Financial Capability Study (NFCS) and, more recently, the Survey of Consumer Finances (SCF), and in many national surveys around the world. They have also become the standard way to measure financial literacy in surveys used by the private sector. For example, the Aegon Center for Longevity and Retirement included the Big Three questions in the 2018 Aegon Retirement Readiness Survey, covering around 16,000 people in 15 countries. Both ING and Allianz, but also investment funds, and pension funds have used the Big Three to measure financial literacy. The exact wording of the questions is provided in Table 1 .

2.2 Cross-country comparison

The first examination of financial literacy using the Big Three was possible due to a special module on financial literacy and retirement planning that Lusardi and Mitchell designed for the 2004 Health and Retirement Study (HRS), which is a survey of Americans over age 50. Astonishingly, the data showed that only half of older Americans—who presumably had made many financial decisions in their lives—could answer the two basic questions measuring understanding of interest rates and inflation (Lusardi and Mitchell, 2011b ). And just one third demonstrated understanding of these two concepts and answered the third question, measuring understanding of risk diversification, correctly. It is sobering that recent US surveys, such as the 2015 NFCS, the 2016 SCF, and the 2017 Survey of Household Economics and Financial Decisionmaking (SHED), show that financial knowledge has remained stubbornly low over time.

Over time, the Big Three have been added to other national surveys across countries and Lusardi and Mitchell have coordinated a project called Financial Literacy around the World (FLat World), which is an international comparison of financial literacy (Lusardi and Mitchell, 2011c ).

Findings from the FLat World project, which so far includes data from 15 countries, including Switzerland, highlight the urgent need to improve financial literacy (see Table 2 ). Across countries, financial literacy is at a crisis level, with the average rate of financial literacy, as measured by those answering correctly all three questions, at around 30%. Moreover, only around 50% of respondents in most countries are able to correctly answer the two financial literacy questions on interest rates and inflation correctly. A noteworthy point is that most countries included in the FLat World project have well-developed financial markets, which further highlights the cause for alarm over the demonstrated lack of the financial literacy. The fact that levels of financial literacy are so similar across countries with varying levels of economic development—indicating that in terms of financial knowledge, the world is indeed flat —shows that income levels or ubiquity of complex financial products do not by themselves equate to a more financially literate population.

Other noteworthy findings emerge in Table 2 . For instance, as expected, understanding of the effects of inflation (i.e., of real versus nominal values) among survey respondents is low in countries that have experienced deflation rather than inflation: in Japan, understanding of inflation is at 59%; in other countries, such as Germany, it is at 78% and, in the Netherlands, it is at 77%. Across countries, individuals have the lowest level of knowledge around the concept of risk, and the percentage of correct answers is particularly low when looking at knowledge of risk diversification. Here, we note the prevalence of “do not know” answers. While “do not know” responses hover around 15% on the topic of interest rates and 18% for inflation, about 30% of respondents—in some countries even more—are likely to respond “do not know” to the risk diversification question. In Switzerland, 74% answered the risk diversification question correctly and 13% reported not knowing the answer (compared to 3% and 4% responding “do not know” for the interest rates and inflation questions, respectively).

These findings are supported by many other surveys. For example, the 2014 Standard & Poor’s Global Financial Literacy Survey shows that, around the world, people know the least about risk and risk diversification (Klapper, Lusardi, and Van Oudheusden, 2015 ). Similarly, results from the 2016 Allianz survey, which collected evidence from ten European countries on money, financial literacy, and risk in the digital age, show very low-risk literacy in all countries covered by the survey. In Austria, Germany, and Switzerland, which are the three top-performing nations in term of financial knowledge, less than 20% of respondents can answer three questions related to knowledge of risk and risk diversification (Allianz, 2017 ).

Other surveys show that the findings about financial literacy correlate in an expected way with other data. For example, performance on the mathematics and science sections of the OECD Program for International Student Assessment (PISA) correlates with performance on the Big Three and, specifically, on the question relating to interest rates. Similarly, respondents in Sweden, which has experienced pension privatization, performed better on the risk diversification question (at 68%), than did respondents in Russia and East Germany, where people have had less exposure to the stock market. For researchers studying financial knowledge and its effects, these findings hint to the fact that financial literacy could be the result of choice and not an exogenous variable.

To summarize, financial literacy is low across the world and higher national income levels do not equate to a more financially literate population. The design of the Big Three questions enables a global comparison and allows for a deeper understanding of financial literacy. This enhances the measure’s utility because it helps to identify general and specific vulnerabilities across countries and within population subgroups, as will be explained in the next section.

2.3 Who knows the least?

Low financial literacy on average is exacerbated by patterns of vulnerability among specific population subgroups. For instance, as reported in Lusardi and Mitchell ( 2014 ), even though educational attainment is positively correlated with financial literacy, it is not sufficient. Even well-educated people are not necessarily savvy about money. Financial literacy is also low among the young. In the USA, less than 30% of respondents can correctly answer the Big Three by age 40, even though many consequential financial decisions are made well before that age (see Fig. 1 ). Similarly, in Switzerland, only 45% of those aged 35 or younger are able to correctly answer the Big Three questions. Footnote 1 And if people may learn from making financial decisions, that learning seems limited. As shown in Fig. 1 , many older individuals, who have already made decisions, cannot answer three basic financial literacy questions.

Financial literacy across age in the USA. This figure shows the percentage of respondents who answered correctly all Big Three questions by age group (year 2015). Source: 2015 US National Financial Capability Study

A gender gap in financial literacy is also present across countries. Women are less likely than men to answer questions correctly. The gap is present not only on the overall scale but also within each topic, across countries of different income levels, and at different ages. Women are also disproportionately more likely to indicate that they do not know the answer to specific questions (Fig. 2 ), highlighting overconfidence among men and awareness of lack of knowledge among women. Even in Finland, which is a relatively equal society in terms of gender, 44% of men compared to 27% of women answer all three questions correctly and 18% of women give at least one “do not know” response versus less than 10% of men (Kalmi and Ruuskanen, 2017 ). These figures further reflect the universality of the Big Three questions. As reported in Fig. 2 , “do not know” responses among women are prevalent not only in European countries, for example, Switzerland, but also in North America (represented in the figure by the USA, though similar findings are reported in Canada) and in Asia (represented in the figure by Japan). Those interested in learning more about the differences in financial literacy across demographics and other characteristics can consult Lusardi and Mitchell ( 2011c , 2014 ).

Gender differences in the responses to the Big Three questions. Sources: USA—Lusardi and Mitchell, 2011c ; Japan—Sekita, 2011 ; Switzerland—Brown and Graf, 2013

3 Does financial literacy matter?

A growing number of financial instruments have gained importance, including alternative financial services such as payday loans, pawnshops, and rent to own stores that charge very high interest rates. Simultaneously, in the changing economic landscape, people are increasingly responsible for personal financial planning and for investing and spending their resources throughout their lifetime. We have witnessed changes not only in the asset side of household balance sheets but also in the liability side. For example, in the USA, many people arrive close to retirement carrying a lot more debt than previous generations did (Lusardi, Mitchell, and Oggero, 2018 ). Overall, individuals are making substantially more financial decisions over their lifetime, living longer, and gaining access to a range of new financial products. These trends, combined with low financial literacy levels around the world and, particularly, among vulnerable population groups, indicate that elevating financial literacy must become a priority for policy makers.

There is ample evidence of the impact of financial literacy on people’s decisions and financial behavior. For example, financial literacy has been proven to affect both saving and investment behavior and debt management and borrowing practices. Empirically, financially savvy people are more likely to accumulate wealth (Lusardi and Mitchell, 2014 ). There are several explanations for why higher financial literacy translates into greater wealth. Several studies have documented that those who have higher financial literacy are more likely to plan for retirement, probably because they are more likely to appreciate the power of interest compounding and are better able to do calculations. According to the findings of the FLat World project, answering one additional financial question correctly is associated with a 3–4 percentage point greater probability of planning for retirement; this finding is seen in Germany, the USA, Japan, and Sweden. Financial literacy is found to have the strongest impact in the Netherlands, where knowing the right answer to one additional financial literacy question is associated with a 10 percentage point higher probability of planning (Mitchell and Lusardi, 2015 ). Empirically, planning is a very strong predictor of wealth; those who plan arrive close to retirement with two to three times the amount of wealth as those who do not plan (Lusardi and Mitchell, 2011b ).

Financial literacy is also associated with higher returns on investments and investment in more complex assets, such as stocks, which normally offer higher rates of return. This finding has important consequences for wealth; according to the simulation by Lusardi, Michaud, and Mitchell ( 2017 ), in the context of a life-cycle model of saving with many sources of uncertainty, from 30 to 40% of US retirement wealth inequality can be accounted for by differences in financial knowledge. These results show that financial literacy is not a sideshow, but it plays a critical role in saving and wealth accumulation.

Financial literacy is also strongly correlated with a greater ability to cope with emergency expenses and weather income shocks. Those who are financially literate are more likely to report that they can come up with $2000 in 30 days or that they are able to cover an emergency expense of $400 with cash or savings (Hasler, Lusardi, and Oggero, 2018 ).

With regard to debt behavior, those who are more financially literate are less likely to have credit card debt and more likely to pay the full balance of their credit card each month rather than just paying the minimum due (Lusardi and Tufano, 2009 , 2015 ). Individuals with higher financial literacy levels also are more likely to refinance their mortgages when it makes sense to do so, tend not to borrow against their 401(k) plans, and are less likely to use high-cost borrowing methods, e.g., payday loans, pawn shops, auto title loans, and refund anticipation loans (Lusardi and de Bassa Scheresberg, 2013 ).

Several studies have documented poor debt behavior and its link to financial literacy. Moore ( 2003 ) reported that the least financially literate are also more likely to have costly mortgages. Lusardi and Tufano ( 2015 ) showed that the least financially savvy incurred high transaction costs, paying higher fees and using high-cost borrowing methods. In their study, the less knowledgeable also reported excessive debt loads and an inability to judge their debt positions. Similarly, Mottola ( 2013 ) found that those with low financial literacy were more likely to engage in costly credit card behavior, and Utkus and Young ( 2011 ) concluded that the least literate were more likely to borrow against their 401(k) and pension accounts.

Young people also struggle with debt, in particular with student loans. According to Lusardi, de Bassa Scheresberg, and Oggero ( 2016 ), Millennials know little about their student loans and many do not attempt to calculate the payment amounts that will later be associated with the loans they take. When asked what they would do, if given the chance to revisit their student loan borrowing decisions, about half of Millennials indicate that they would make a different decision.

Finally, a recent report on Millennials in the USA (18- to 34-year-olds) noted the impact of financial technology (fintech) on the financial behavior of young individuals. New and rapidly expanding mobile payment options have made transactions easier, quicker, and more convenient. The average user of mobile payments apps and technology in the USA is a high-income, well-educated male who works full time and is likely to belong to an ethnic minority group. Overall, users of mobile payments are busy individuals who are financially active (holding more assets and incurring more debt). However, mobile payment users display expensive financial behaviors, such as spending more than they earn, using alternative financial services, and occasionally overdrawing their checking accounts. Additionally, mobile payment users display lower levels of financial literacy (Lusardi, de Bassa Scheresberg, and Avery, 2018 ). The rapid growth in fintech around the world juxtaposed with expensive financial behavior means that more attention must be paid to the impact of mobile payment use on financial behavior. Fintech is not a substitute for financial literacy.

4 The way forward for financial literacy and what works

Overall, financial literacy affects everything from day-to-day to long-term financial decisions, and this has implications for both individuals and society. Low levels of financial literacy across countries are correlated with ineffective spending and financial planning, and expensive borrowing and debt management. These low levels of financial literacy worldwide and their widespread implications necessitate urgent efforts. Results from various surveys and research show that the Big Three questions are useful not only in assessing aggregate financial literacy but also in identifying vulnerable population subgroups and areas of financial decision-making that need improvement. Thus, these findings are relevant for policy makers and practitioners. Financial illiteracy has implications not only for the decisions that people make for themselves but also for society. The rapid spread of mobile payment technology and alternative financial services combined with lack of financial literacy can exacerbate wealth inequality.

To be effective, financial literacy initiatives need to be large and scalable. Schools, workplaces, and community platforms provide unique opportunities to deliver financial education to large and often diverse segments of the population. Furthermore, stark vulnerabilities across countries make it clear that specific subgroups, such as women and young people, are ideal targets for financial literacy programs. Given women’s awareness of their lack of financial knowledge, as indicated via their “do not know” responses to the Big Three questions, they are likely to be more receptive to financial education.

The near-crisis levels of financial illiteracy, the adverse impact that it has on financial behavior, and the vulnerabilities of certain groups speak of the need for and importance of financial education. Financial education is a crucial foundation for raising financial literacy and informing the next generations of consumers, workers, and citizens. Many countries have seen efforts in recent years to implement and provide financial education in schools, colleges, and workplaces. However, the continuously low levels of financial literacy across the world indicate that a piece of the puzzle is missing. A key lesson is that when it comes to providing financial education, one size does not fit all. In addition to the potential for large-scale implementation, the main components of any financial literacy program should be tailored content, targeted at specific audiences. An effective financial education program efficiently identifies the needs of its audience, accurately targets vulnerable groups, has clear objectives, and relies on rigorous evaluation metrics.

Using measures like the Big Three questions, it is imperative to recognize vulnerable groups and their specific needs in program designs. Upon identification, the next step is to incorporate this knowledge into financial education programs and solutions.

School-based education can be transformational by preparing young people for important financial decisions. The OECD’s Programme for International Student Assessment (PISA), in both 2012 and 2015, found that, on average, only 10% of 15-year-olds achieved maximum proficiency on a five-point financial literacy scale. As of 2015, about one in five of students did not have even basic financial skills (see OECD, 2017 ). Rigorous financial education programs, coupled with teacher training and high school financial education requirements, are found to be correlated with fewer defaults and higher credit scores among young adults in the USA (Urban, Schmeiser, Collins, and Brown, 2018 ). It is important to target students and young adults in schools and colleges to provide them with the necessary tools to make sound financial decisions as they graduate and take on responsibilities, such as buying cars and houses, or starting retirement accounts. Given the rising cost of education and student loan debt and the need of young people to start contributing as early as possible to retirement accounts, the importance of financial education in school cannot be overstated.

There are three compelling reasons for having financial education in school. First, it is important to expose young people to the basic concepts underlying financial decision-making before they make important and consequential financial decisions. As noted in Fig. 1 , financial literacy is very low among the young and it does not seem to increase a lot with age/generations. Second, school provides access to financial literacy to groups who may not be exposed to it (or may not be equally exposed to it), for example, women. Third, it is important to reduce the costs of acquiring financial literacy, if we want to promote higher financial literacy both among individuals and among society.

There are compelling reasons to have personal finance courses in college as well. In the same way in which colleges and university offer courses in corporate finance to teach how to manage the finances of firms, so today individuals need the knowledge to manage their own finances over the lifetime, which in present discounted value often amount to large values and are made larger by private pension accounts.

Financial education can also be efficiently provided in workplaces. An effective financial education program targeted to adults recognizes the socioeconomic context of employees and offers interventions tailored to their specific needs. A case study conducted in 2013 with employees of the US Federal Reserve System showed that completing a financial literacy learning module led to significant changes in retirement planning behavior and better-performing investment portfolios (Clark, Lusardi, and Mitchell, 2017 ). It is also important to note the delivery method of these programs, especially when targeted to adults. For instance, video formats have a significantly higher impact on financial behavior than simple narratives, and instruction is most effective when it is kept brief and relevant (Heinberg et al., 2014 ).

The Big Three also show that it is particularly important to make people familiar with the concepts of risk and risk diversification. Programs devoted to teaching risk via, for example, visual tools have shown great promise (Lusardi et al., 2017 ). The complexity of some of these concepts and the costs of providing education in the workplace, coupled with the fact that many older individuals may not work or work in firms that do not offer such education, provide other reasons why financial education in school is so important.

Finally, it is important to provide financial education in the community, in places where people go to learn. A recent example is the International Federation of Finance Museums, an innovative global collaboration that promotes financial knowledge through museum exhibits and the exchange of resources. Museums can be places where to provide financial literacy both among the young and the old.

There are a variety of other ways in which financial education can be offered and also targeted to specific groups. However, there are few evaluations of the effectiveness of such initiatives and this is an area where more research is urgently needed, given the statistics reported in the first part of this paper.

5 Concluding remarks

The lack of financial literacy, even in some of the world’s most well-developed financial markets, is of acute concern and needs immediate attention. The Big Three questions that were designed to measure financial literacy go a long way in identifying aggregate differences in financial knowledge and highlighting vulnerabilities within populations and across topics of interest, thereby facilitating the development of tailored programs. Many such programs to provide financial education in schools and colleges, workplaces, and the larger community have taken existing evidence into account to create rigorous solutions. It is important to continue making strides in promoting financial literacy, by achieving scale and efficiency in future programs as well.

In August 2017, I was appointed Director of the Italian Financial Education Committee, tasked with designing and implementing the national strategy for financial literacy. I will be able to apply my research to policy and program initiatives in Italy to promote financial literacy: it is an essential skill in the twenty-first century, one that individuals need if they are to thrive economically in today’s society. As the research discussed in this paper well documents, financial literacy is like a global passport that allows individuals to make the most of the plethora of financial products available in the market and to make sound financial decisions. Financial literacy should be seen as a fundamental right and universal need, rather than the privilege of the relatively few consumers who have special access to financial knowledge or financial advice. In today’s world, financial literacy should be considered as important as basic literacy, i.e., the ability to read and write. Without it, individuals and societies cannot reach their full potential.

See Brown and Graf ( 2013 ).

Abbreviations

Defined benefit (refers to pension plan)

Defined contribution (refers to pension plan)

Financial Literacy around the World

National Financial Capability Study

Organisation for Economic Co-operation and Development

Programme for International Student Assessment

Survey of Consumer Finances

Survey of Household Economics and Financial Decisionmaking

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Urban, C., Schmeiser, M., Collins, J. M., & Brown, A. (2018). The effects of high school personal financial education policies on financial behavior. Economics of Education Review . https://www.sciencedirect.com/science/article/abs/pii/S0272775718301699 .

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Van Rooij, M. C., Lusardi, A., & Alessie, R. J. (2011). Financial literacy and retirement preparation in the Netherlands. Journal of Pension Economics and Finance, 10 (4), 527–545.

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Acknowledgements

This paper represents a summary of the keynote address I gave to the 2018 Annual Meeting of the Swiss Society of Economics and Statistics. I would like to thank Monika Butler, Rafael Lalive, anonymous reviewers, and participants of the Annual Meeting for useful discussions and comments, and Raveesha Gupta for editorial support. All errors are my responsibility.

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Lusardi, A. Financial literacy and the need for financial education: evidence and implications. Swiss J Economics Statistics 155 , 1 (2019). https://doi.org/10.1186/s41937-019-0027-5

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Writing Prompts for Weekly Journaling in Personal Finance

Thanks to Brian Page of Reading High School for getting the tweets started and for the multiple contributors to his initial inquiry:

What reflection prompts should be required in a student financial literacy journal, as least weekly?

The responses are rolling in:

What did you learn that you will put to practice now or in the near future?
What tools did you discover that you plan to use now or in the near future?
What was the strongest emotion you had this week relating to money? Could be your spending, saving or giving — or friend/family/govnmt.
Another potential prompt: I wish we would spend additional time exploring ___(name one or more concepts) because __________
I regularly ask my students: If we had more time in class, I’d like to know more about _____.
Name something you bought with your own money. Are you happy with the purchase? Or do you wish you still had the money to spend?
Identify 1 money decision you made this week (saving, spending or giving). Did you consider alternatives? Would you do something different?
What money topic did you discuss with parent/guardian/friend/sibling this week? What did you learn? Encourage conversation. Uncover myths.

Interested in other writing prompts? Here a few more:

Ten that we developed
Ten from the NY Times

About the Author

Tim ranzetta.

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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Financial Literacy

Course: financial literacy > unit 1.

Welcome to Financial Literacy
Welcome to Financial Literacy!

What is financial literacy?

Is financial literacy just about knowing how to budget, is it too late for me to become financially literate, do i need specific math skills to be financially literate, isn't financial literacy only important for people who make a lot of money, is it enough to just put my money in a savings account, want to join the conversation.

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The Ultimate Guide to Financial Literacy for Adults

Search Search Please fill out this field.

What Is Financial Literacy?

Personal finance basics.

Bank Accounts
Credit Cards
How to Start Investing
Frequently Asked Questions (FAQs)

The Bottom Line

Learn the skills now that you need for a more financially secure life

Caleb has been the Editor-in-Chief of Investopedia since 2016. He is an award-winning media executive with more than 20 years of experience in business news, digital publishing, and documentaries. Caleb is the on the Board of Governors and Executive Committee of SABEW (Society for Advancing Business Editing & Writing), and his awards include a Peabody, EPPY, SABEW Best in Business, and two Emmy nominations.

We know that the earlier you learn the basics of how money works, the more confident and successful you’ll be with your finances later in life. It’s never too late to start learning, but it pays to have a head start. The first steps into the world of money start with education.

Banking, budgeting, saving, credit, debt, and investing are the pillars that support most of the financial decisions that we’ll make in our lives. At Investopedia, we have more than 30,000 articles, terms, Frequently Asked Questions (FAQs), and videos that explore these topics. We’ve spent more than 20 years building and improving our resources to help you make smart financial and investing decisions.

This guide is a great place to start, and today is a great day to do it. Let’s begin with financial literacy —what it is and how it can improve your life.

Key Takeaways

Financial literacy is the ability to understand and make use of a variety of financial skills.
Those with higher levels of financial literacy are more likely to spend less income, create an emergency fund, and open a retirement account than those with lower levels.
Some of the basics of financial literacy and its practical application in everyday life include banking, budgeting, handling debt and credit, and investing.

Financial literacy is the ability to understand and make use of a variety of financial skills, including personal financial management, budgeting, and investing. It also means comprehending certain financial principles and concepts, such as the time value of money , compound interest , managing debt, and financial planning.

Achieving financial literacy can help individuals to avoid making poor financial decisions. It can help them become self-sufficient and achieve financial stability. Key steps to attaining financial literacy include learning how to create a budget, track spending, pay off debt, and plan for retirement.

Educating yourself on these topics also involves learning how money works, setting and achieving financial goals, becoming aware of unethical/discriminatory financial practices, and managing financial challenges that life throws your way.

The Importance of Financial Literacy

In its National Financial Capability Study the Financial Industry Regulatory Authority (FINRA) found that Americans’ with higher levels of financial literacy were more likely to make ends meet, spend less of their income, create a three-month emergency fund, and open a retirement account than those with lower financial literacy.

Making informed financial decisions is more important than ever. Take retirement planning. Many workers once relied on pension plans to fund their retirement lives, with the financial burden and decision-making for pension funds borne by the companies or governments that sponsored them.

Today, few workers get pensions; instead some are offered the option of participating in a 401(k) plan . This involves decisions that employees themselves have to make about contribution levels and investment choices. Those without employer options need to actively seek out and open individual retirement accounts (IRAs) and other tax-advantaged retirement accounts .

Add to this people’s increasing life spans (leading to longer retirements), Social Security benefits that barely support basic survival, complicated health and other insurance options, more complex savings and investment instruments to select from—and a plethora of choices from banks, credit unions, brokerage firms, credit card companies, and more.

It’s clear that financial literacy is a must for making thoughtful and informed decisions, avoiding unnecessary levels of debt, helping family members through these complex decisions, and having adequate income in retirement.

Personal finance is where financial literacy translates into individual financial decision-making. How do you manage your money? Which savings and investment vehicles are you using? Personal finance is about making and meeting your financial goals, whether you want to own a home, help other members of your family, save for your children’s college education, support causes that you care about, plan for retirement, or anything else.

Among other topics, it encompasses banking, budgeting, handling debt and credit, and investing. Let’s take a look at these basics to get you started.

Introduction to Bank Accounts

A bank account is typically the first financial account that you’ll open. Bank accounts can hold and build the money you'll need for major purchases and life events. Here’s some background on bank accounts and why they are step one in creating a stable financial future.

Why Do I Need a Bank Account?

Though the majority of Americans do have bank accounts, 6% of households in the United States still don’t have one. Why is it so important to open a bank account? Because it’s safer than holding cash. Assets held in a bank are harder to steal, and in the U.S., they’re generally insured by the Federal Deposit Insurance Corporation (FDIC) . That means you should always have access to your cash, even if every customer decided to withdraw their money at the same time.

Many financial transactions require you to have a bank account to:

Use a debit or credit card
Use payment apps like Venmo or PayPal
Write a check
Buy or rent a home
Receive your paycheck from your employer
Earn interest on your money

Online vs. Brick-and-Mortar Banks

When you think of a bank, you probably picture a building. This is called a brick-and-mortar bank. Many brick-and-mortar banks also allow you to open accounts and manage your money online.

Some banks are only online and have no physical buildings. These banks typically offer the same services as brick-and-mortar banks, aside from the ability to visit them in person.

Which Type of Bank Can I Use?

Retail banks : This is the most common type of bank at which people have accounts. Retail banks are for-profit companies that offer checking and savings accounts, loans, credit cards, and insurance. Retail banks can have physical, in-person buildings that you can visit or they can be online only. Most offer both options. Banks’ online technology tends to be advanced, and they often have more locations and ATMs nationwide than credit unions do.

Credit unions : Credit unions provide savings and checking accounts, issue loans, and offer other financial products, just like banks do. However, they are not-for-profit organizations owned by their members. Credit unions tend to have lower fees and better interest rates on savings accounts and loans. Credit unions are sometimes known for providing more personalized customer service, though they usually have far fewer branches and ATMs.

Assets held in a credit union are insured by the National Credit Union Administration (NCUA) , which is equivalent to the FDIC for banks.

What Types of Bank Accounts Can I Open?

There are three main types of bank accounts that the average person may want to open:

1. Savings account : A savings account is an interest-bearing deposit account held at a bank or other financial institution. Savings accounts typically pay a low interest rate, but their safety and reliability make them a sensible option for saving available cash for short-term needs.

They may have some legal limitations on how often you can withdraw money . However, they’re generally very flexible so they’re ideal for building an emergency fund, saving for a short-term goal like buying a car or going on vacation, or simply storing extra cash that you don’t need in your checking account.

2. Checking account : A checking account is also a deposit account at a bank or other financial institution that allows you to make deposits and withdrawals. Checking accounts are very liquid, meaning that they allow numerous withdrawals per month (as opposed to less liquid savings or investment accounts) though they earn little to no interest.

Money can be deposited at banks and ATMs, through direct deposit, or through another type of electronic transfer. Account holders can withdraw funds via banks and ATMs, by writing checks, or using debit cards linked to their accounts.

You may be able to find a checking account with no fees. Others have monthly and other charges (such as for overdrafts or using an out-of-network ATM) based on, for example, how much you keep in the account or whether there’s a direct deposit paycheck or automatic-withdrawal mortgage payment connected to the account.

Lifeline and second-chance accounts , available at some banks, can help those who have difficulty qualifying for a traditional checking account.

3. High-yield savings account : A high-yield savings account usually pays a much higher rate of interest than a standard savings account. The tradeoff for earning more interest on your money is that high-yield accounts tend to require bigger initial deposits, larger minimum balances, and higher fees.

You might be able to open a high-yield savings account at your current bank, but online banks tend to have the highest interest rates.

What’s An Emergency Fund?

An emergency fund is not a specific type of bank account but can be any source of cash that you’ve saved to help you handle financial hardships like job losses, medical bills, or car repairs. Here's how they work:

Most people use a separate savings account for their emergency savings.
The account should eventually total enough to cover at least three to six months’ worth of expenses.
Emergency fund money should be off-limits for paying regular expenses.

Introduction to Credit Cards

You know them as the plastic cards that (almost) everyone carries in their wallets. Credit cards are accounts that let you borrow money from the credit card issuer and pay it back over time. For every month that you don’t pay back the money in full, you’ll be charged interest on your remaining balance . Note that some credit cards, called charge cards , require you to pay your balance in full each month. However, these are less common.

What’s the Difference Between Credit and Debit Cards?

Here is the difference :

Debit cards take money directly out of your checking account. You can’t borrow money with debit cards, which means that you can’t spend more cash than you have in the bank. And debit cards don’t help you to build a credit history and credit rating .

Credit cards allow you to borrow money and do not pull cash from your bank account. This can be helpful for large, unexpected purchases. But carrying a balance every month—not paying back in full the money that you borrowed—means that you’ll owe interest to the credit card issuer. In fact, as of Q4 2022, Americans owed $986 billion in credit card debt. So be very careful about spending more money than you have, because debt can build up quickly and become difficult to pay off.

On the other hand, using a credit card judiciously and paying your credit card bills on time helps you establish a credit history and a good credit rating. It’s important to build a good credit rating not only to qualify for the best credit cards but also because you will get more favorable interest rates on car loans, personal loans, and mortgages.

What Is APR?

APR stands for annual percentage rate. This is the amount of interest that you’ll owe the credit card issuer on any unpaid balance. You’ll want to pay close attention to this number when you apply for a credit card. A higher number can cost you hundreds or even thousands of dollars if you carry a large balance over time. The median APR today is about 24% , but your rate may be higher if you have bad credit . Interest rates also tend to vary by the type of credit card.

Which Credit Card Should I Choose?

Credit scores have a big impact on your odds of getting approved for a credit card. Understanding what range your score falls into can help you narrow the options as you decide on the cards for which you may apply. Beyond your credit score, you’ll also need to decide which perks best suit your lifestyle and spending habits.

If you’ve never had a credit card before, or if you have bad credit, you’ll likely need to apply for either a secured credit card or a subprime credit card . By using one of these and paying back on time, you can raise your credit score and earn the right to credit at better rates.

If you have a fair to good credit score, you can choose from a variety of credit card types, such as:

Travel rewards cards. These credit cards offer points redeemable for travel—including flights, hotels, and rental cars—with each dollar you spend.
Cash-back cards . If you don’t travel often—or don’t want to deal with converting points into real-life perks—a cash-back card might be the best fit for you. Every month, you’ll receive a small portion of your spending back, in cash or as a credit to your statement.
Balance transfer cards. If you have balances on other cards with high interest rates, transferring your balance to a lower-rate credit card could save you money, help you pay off balances, and help improve your credit score.
Low- or No-APR cards. If you routinely carry a balance from month to month, switching to a credit card with a low or no APR could save you hundreds of dollars per year in interest payments.

Be aware of your protections under the Equal Credit Opportunity Act . Research credit opportunities and available interest rates, and be sure that you are offered the best rates for your particular credit history and financial situation.

How to Create a Budget

Creating a budget is one of the simplest and most effective ways to control your spending, saving, and investing. You can’t begin to improve your financial health if you don’t know where your money is going, so start tracking your expenses against your income. Then set clear goals.

One budget template that helps individuals reach their goals, manage their money, and save for emergencies and retirement is the 50/20/30 budget rule : spending 50% on needs, 20% on savings, and 30% on wants.

How Do I Create a Budget?

Budgeting starts with tracking how much money you receive and spend every month. You can do this in an Excel sheet, on paper, or with a budgeting app . It’s up to you. However you decide to track, clearly lay out the following:

Income: List all sources of money that you receive in a month, with the dollar amount. This can include paychecks, investment income, alimony, settlements, and money that you make from side jobs or other projects, such as selling crafts.
Expenses: List every purchase that you make in a month, split into two categories: fixed expenses and discretionary spending . Review your bank statements, credit card statements, and brokerage account statements to be sure to capture them all. Fixed expenses are the purchases that you must make every month. Their amounts don’t change (or change very little) and are considered essential. They include rent/mortgage payments, loan payments, and utilities. Discretionary spending is nonessential spending or varying purchases for things like restaurant meals, shopping, clothes, and travel. Consider them wants rather than needs.
Savings : Record the amount of money that you’re able to save each month, whether it’s in cash, cash deposited into a bank account, or money that you add to an investment account or retirement account like an IRA or 401(k) (if your employer offers one).

Subtract your total expenses from your total income to get the amount of money you have left at the end of the month. Now that you have a clear picture of money coming in, money going out, and money saved, you can identify which expenses you can cut back on, if necessary.

If you don’t already have one, put your extra money into an emergency fund until you’ve saved at least three to six months’ worth of expenses (in case of a job loss or other emergency). Don’t use this money for discretionary spending. The key is to keep it safe and grow it for times when your income decreases or stops.

How to Start Investing

Once you have enough savings to start investing, you’ll want to learn the basics of where and how to invest your money. Decide what to invest in and how much to invest by understanding the risks (and potential rewards) of different types of investments.

What Is the Stock Market?

The stock market refers to the collection of markets and exchanges where stock buying and selling takes place. The terms “stock market” and “stock exchange” can be used interchangeably. And even though it’s called a stock market, other financial securities , such as exchange-traded funds (ETFs) , corporate bonds , and derivatives based on stocks, commodities, currencies, and bonds, are also traded there. There are multiple stock trading venues. The leading stock exchanges in the U.S. include the New York Stock Exchange (NYSE) , Nasdaq , and the Cboe Options Exchange .

How Do I Invest?

To buy stocks , you need to use a broker . This is a professional person or digital platform whose job it is to handle the transaction for you. For new investors, there are three basic categories of brokers:

A full-service broker who manages your investment transactions and provides advice for a fee.
An online/discount broker that executes your transactions and provides advice depending on how much you have invested. Examples include Fidelity, TD Ameritrade, and Charles Schwab.
A robo-advisor that executes your trades and can pick investments for you with little human assistance. Examples include Betterment, Wealthfront, and Schwab Intelligent Portfolios.

What Should I Invest in?

There’s no right answer for everyone. Which securities you buy, and how much you buy, will depend on the amount of money that you have available for investing and how much risk you’re willing to take to try to earn a higher return. Here are the most common securities to invest in, listed in descending order of risk:

Stocks: A stock (also known as “shares” or “equity”) is a type of investment that signifies partial ownership in the issuing company. This entitles the stockholder to a proportion of the corporation’s assets and earnings.

Owning stock gives you the right to vote in shareholder meetings, receive dividends (which come from the company’s profits) if and when they are distributed, and sell your shares to somebody else.

The price of a stock fluctuates throughout the day and can depend on many factors, including the company’s performance, the domestic economy, the global economy, the day’s news, and more. Stocks can rise in value, fall in value, or even become worthless, making them more volatile and potentially riskier than many other types of investments.

ETFs: An exchange-traded fund, or ETF, consists of a collection of securities, such as stocks. It often tracks an underlying index . ETFs can invest in any number of industry sectors or use various strategies.

Think of an ETF as a pie containing many different securities. When you buy shares of an ETF, you’re buying a slice of the pie, which contains slivers of the securities inside. This lets you purchase a variety of many stocks at once, with the ease and convenience of only one purchase—the ETF.

In many ways, ETFs are similar to mutual funds. For instance, they both offer instant diversification and are professionally managed. However, ETFs are listed on exchanges and ETF shares trade throughout the day just like ordinary stocks.

Investing in ETFs is considered less risky than investing in individual stocks because there are many securities inside the ETF. If some of those securities fall in value, others may stay steady or rise in value.

Mutual funds: A mutual fund is a type of investment consisting of a portfolio of stocks, bonds, or other securities. Mutual funds give small or individual investors access to diversified, professionally managed portfolios at a low price.

There are many categories of mutual funds, representing the kinds of securities in which they invest, their investment objectives, and the type of returns that they seek. Most employer-sponsored retirement plans invest in mutual funds.

Investing in shares of a mutual fund is different from investing in individual shares of stock because a mutual fund owns many different stocks (or other securities). Unlike stocks or ETFs that trade at varying prices throughout the day, mutual fund purchases and redemptions take place only at the end of each trading day and at a fund's net asset value (NAV) . Similar to ETFs, mutual funds are considered less risky than stocks because of their diversification .

Mutual funds charge annual fees, called expense ratios , and in some cases, commissions.

Bonds: Bonds are issued by companies, municipalities, states, and sovereign governments to finance projects and operations. When an investor buys a bond, they’re effectively lending their money to the bond issuer, with the promise of repayment plus interest. A bond’s coupon rate is the interest rate that the investor will earn.

A bond is referred to as a fixed-income instrument because bonds traditionally have paid a fixed interest rate to investors, although some bonds pay variable interest rates . Bond prices inversely correlate with interest rates. When rates go up, bond prices fall, and vice versa. Bonds have maturity dates, which are the point in time when the principal amount must be paid back to the investor in full or the issuer will risk default.

Bonds are rated by how likely the issuer is to pay you back. Higher-rated bonds, known as investment grade bonds, are viewed as safer and more stable. Such offerings are tied to publicly traded corporations and government entities that boast positive outlooks.

Investment grade bonds receive “AAA” to “BBB-” ratings from Standard and Poor’s and “Aaa” to “Baa3” ratings from Moody’s. Bonds with higher ratings will usually pay lower rates of interest than those with lower ratings. U.S. Treasury bonds are the most common AAA-rated bond securities.

Are Banks Safe?

Most bank accounts in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) up to certain limits, currently defined as “up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category.” If you have a great deal of money to put in the bank, you can make sure that it’s all covered by opening multiple accounts.

Is It Safe to Invest in the Stock Market?

Stocks are inherently risky—some more than others—and you can lose money if their share prices fall. Brokerage accounts are insured by the Securities Investor Protection Corporation for up to $500,000 in securities and cash. However, that applies only if the brokerage firm fails and is unable to repay its customers. It does not cover normal investor losses.

What Is the Safest Investment?

U.S. Treasury securities, including bonds, bills, and notes, are backed by the U.S. government and generally are considered the safest investments in the world. However, these kinds of investments tend to pay low rates of interest, so investors do face a risk that inflation may erode the purchasing power of their money over time.

The topics in this article are just the beginning of a financial education, but they cover the most important and frequently used products, tools, and tips for getting started. If you’re ready to learn more, check out these additional resources from Investopedia:

Investopedia Academy
Investopedia YouTube Channel
Investopedia Dictionary
Investopedia Stock Market Simulator

FINRA. " National Study by FINRA Foundation Finds U.S. Adults’ Financial Capability Has Generally Grown Despite Pandemic Disruption. "

Federal Reserve System. " Report on the Economic Well-Being of U.S. Households in 2022 - May 2023 ."

Federal Deposit Insurance Corporation. “ What’s Covered: Are My Deposit Accounts Insured by the FDIC? ”

National Credit Union Administration (NCUA). " Mission and Values ."

Federal Reserve Bank of New York. “ Total Household Debt Reaches $16.90 trillion in Q4 2022; Mortgage and Auto Loan Growth Slows ."

S&P Global. " S&P Global Ratings Definitions. "

Moody's. " Rating Scale and Definitions ."

Federal Deposit Insurance Corporation. “ Deposit Insurance FAQs .”

Securities Investor Protection Corporation. “ Mission .”

U.S. Securities and Exchange Commission. " Treasury Securities ."

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Home — Essay Samples — Economics — Money — Importance of Money Management and Financial Literacy for Students

Importance of Money Management and Financial Literacy for Students

Categories: Literacy Money Personal Finance

About this sample

Words: 1537 |

Published: Aug 14, 2023

Words: 1537 | Pages: 3 | 8 min read

Importance of financial literacy and financial education, how other countries apply financial literacy, what can be done within our current school systems, my own financial literacy level.

Anderloni, L. and Vandone, D. (2010), “Risk of overindebtedness and behavioral factors”, Working Paper No 25, Social Science Research Network, Santa Monica, CA.
ASIC (2011), “National financial literacy strategy: Australian securities & investment commission Report No. 229”, available at: www.financialliteracy.gov.au/media/218312/national-financialliteracy-strategy.pdf (accessed 23 October 2016).
Atkinson, A. and Messy, F. (2012), “Measuring financial literacy: results of the OECD/International Network on Financial Education (INFE) Pilot study”, Working Paper No. 15, OECD Working Papers on Finance, Insurance and Private Pensions, OECD Publishing, Paris.
Filipiak, U. and Walle, Y.M. (2015), “The financial literacy gender gap: a question of nature or nurture?”, Discussion Papers No. 176, Courant Research Centre: Poverty, Equity and Growth.
Huston, S.J. (2010), “Measuring financial literacy”, The Journal of Consumer Affairs, Vol. 44 No. 2, pp. 296-316.
National Strategy for Financial Literacy (2012), “Commission for financial literacy and retirement income”, available at: www.cflri.org.nz/sites/default/files/docs/FL-NS-National%20Strategy2012-Aug.pdf (accessed 24 October 2016).
Organisation for Economic Co-operation and Development (OECD) (2012), OECD/INFE High-Level Principles on National Strategies for Financial Education, OECD Publishing, Paris.
Vitt, L.A. (2004), “Consumers financial decisions and the psychology of values”, Journal of Financial Service Professionals, Vol. 58 No. 6, pp. 68-78.

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We should be teaching financial literacy in NY's high schools

Erica Dzwlewicz teaches the “College Money & Investments" elective at Oceanside High School in January 2023. Credit: Debbie Egan-Chin

Financial literacy should be taught in all New York schools. When students take a financial literacy course, they learn personal finance, budgeting, and investing. They become better equipped and informed to make important financial decisions in the future that could impact their long-term financial success and quality of life.

There is no question that investing in financial literacy will pay dividends for our young people later in life.

Recently, the state Education Department’s Blue Ribbon Commission on Graduation Measures recommended to the Board of Regents that financial literacy should be a graduation requirement.

As part of the process to examine New York’s graduation measures, the commission surveyed hundreds of New Yorkers, asking: “What knowledge, skills, and/or experiences do you think are important for all students to have by the end of high school?” One of the most frequent responses was, “Financial literacy: loans, managing money, living within one’s means, saving for retirement …”

Financial literacy clearly has the attention of the public and a required course in our high schools is being given serious consideration by the state Education Department. The department also is examining ways to integrate financial literacy across academic disciplines throughout a student’s academic career. Students should learn age-appropriate topics about money; its value; how to save, invest and spend; and how to budget as the number of financial decisions increase and as more students decide to go to college and incur student loan debt.

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Just as teens are required to take a driver’s education course before getting behind the wheel of a vehicle, we have a responsibility to empower students with the skills to effectively manage their finances before applying for a credit card, student loan or mortgage. It's time for New York to catch up to states who for decades have taught a financial literacy course and required it for high school graduation.

In Utah, where the 2008 class was the first required to take a financial education course, the benefits have been measured. According to a program review in 2018 by the state’s auditor, Utah high school graduates have greater financial knowledge and better financial behaviors. Further, the state auditor found the course’s standards provided “vital life skills that apply to all students regardless of gender, race, or socioeconomic status.”

Experts and researchers have also seen positive outcomes of financial literacy education in Georgia, Idaho, and Texas, with those states reporting relatively higher credit scores and lower relative delinquency rates for students who took a course compared to those who did not.

In New York, only 20 high schools offer a stand-alone, semesterlong personal finance course that may be a requirement to graduate, according to nonprofit Next Gen Personal Finance.

Akron High School in upstate New York for example, began offering personal finance in 2016, and the course became a requirement for graduation in 2018. Students graduate knowing important topics like compound interest, debt, credit scores, how to start saving, and most importantly, how to be ready for a financial emergency.

Young adults are increasingly facing higher levels of debt whether from student loans or credit cards, and many from lower-income households fall victim to predatory lending, scams, and high-interest loans. Preventing these common financial pitfalls starts with financial literacy education in all our schools.

Financial literacy can be a great equalizer for students, and New York cannot afford to wait. It is in the state’s economic and social interests to offer personal finance in our schools now.

This guest essay reflects the views of State Education Commissioner Betty A. Rosa and State Comptroller Thomas P. DiNapoli.

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PMC10645357

Impact of financial literacy, mental budgeting and self control on financial wellbeing: Mediating impact of investment decision making

School of Accountancy, Henan Institute of Economics and Trade, Zhengzhou, Henan, China

Associated Data

All relevant data are within the paper and its Supporting Information files.

The topic of financial wellbeing is a current concern within the realm of personal and household finance. This study aims to examine the influence of cognitive factors, specifically financial literacy, mental budgeting, and self-control, on subjective financial wellbeing. While there exist multiple determinants of financial wellbeing, this research focuses on these particular cognitive factors. The present study aims to examine the mediating role of investment decision-making behavior in the association between cognitive factors and financial well-being. The study employed Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyze the data collected from a sample of 449 Chinese university students, with the aim of assessing the empirical associations. The results indicate that financial literacy, mental budgeting, and self-control exert a favorable and noteworthy influence on an individual’s financial well-being. The results indicate that individuals with a greater degree of financial literacy are more prone to achieving superior financial well-being. Moreover, individuals who practice mental budgeting, a technique that entails mentally classifying and monitoring their expenditures, demonstrate elevated levels of financial well-being. Likewise, the exercise of self-regulation is identified as a pivotal element that impacts an individual’s financial wellbeing. The findings indicate that there is evidence to support the mediator, investment decision-making behavior. This mediator partially mediates the association between the independent variables, namely financial literacy, mental budgeting, and self-control, and financial well-being. The results suggest that individuals with elevated levels of financial literacy, proficient mental budgeting skills, and self-regulatory abilities are inclined towards demonstrating favorable investment decision-making conduct. Consequently, this contributes to their general financial welfare. In general, the study’s theoretical implications augment the current knowledge repository, while its practical implications provide feasible perspectives for policymakers, financial institutions, and individuals to foster financial wellness and enhance financial results.

1. Introduction

The world’s biggest public health issues are depression, anxiety, and stress. Mental health issues affect 84 million Europeans, or 17.3% of the population, according to the Global Health Data Exchange [ 1 ]. Depression and anxiety are the most common mental health problems in society. Public health concerns include anxiety and mood disorder increase [ 2 ]. In 2017, Fiksenbaum et al. [ 3 ] discovered that 4.4 percent of people worldwide have anxiety disorders, with 3.6 percent exhibiting symptoms. Poor mental health is caused by psychological stress, employment issues [ 4 ], and socioeconomic causes [ 5 ]. Financial hardship is rising, according to WHO data [ 6 ]. The UK survey [ 7 ] and PwC’s Employee Financial Wellness Survey [ 8 ] in the US reached similar conclusions. Employees reported financial stress higher than any other type of stress in the poll. The Chinese social structure has similar issues. HSBC found that 64% of Chinese are satisfied with their finances in 2019, up from 57% in 2016. The poll found that 36% of Chinese people worry about saving for retirement and 29% about paying unexpected costs [ 9 ]. Researching a person’s money management, spending, saving, and investing habits is called "financial well-being" [ 10 ]. Lack of financial wellbeing causes financial distress, which lowers physical and mental health and workplace productivity [ 11 – 14 ]. If they think their salary isn’t enough to meet their basic needs, people feel disadvantaged financially [ 15 ].

Several things affect and improve financial well-being. Financial literacy helps people make informed and responsible financial decisions, boosting financial stability and reducing financial worries [ 16 ]. Financial literacy gives people the information, skills, attitudes, and behaviors to manage their money and reach their goals [ 17 ]. It educates people about financial ideas, risks, and decisions [ 18 ]. Financial literacy encourages budgeting, saving, and investing, which improves financial health. They can handle complex financial decisions and avoid financial hazards better. Financial literacy helps people manage their income at difficult times like the COVID-19 epidemic [ 19 ]. Mental budgeting is also crucial to financial health. Individuals and households utilize cognitive operations to arrange and control their finances [ 20 ]. It entails budgeting for several expenditure categories and mentally dividing the monies [ 21 ]. Mental budgeting aids in spending tracking, goal setting, and financial decision-making [ 20 ]. Many research have shown the benefits of mental budgeting for financial health. According to Chun & Johnson [ 22 ], consumers with superior mental budgeting skills are more resistant to store promotions and price fluctuations. This implies that mental budgeting can help people avoid impulse purchases and stay to their budgets. Financial well-being also depends on self-control. Many research have examined the relationship between self-control and financial outcomes like financial assets and financial management behavior. Self-control is the ability to manage ideas, emotions, and actions to attain long-term goals and avoid temptation [ 23 ]. It requires the ability to think rationally, control impulses, and manage money [ 23 , 24 ]. Higher self-control has been linked to improved financial outcomes. Better self-control leads to increased financial assets [ 24 ]. They are also more likely to budget, save, and regulate spending [ 25 ]. Self-control improves financial planning and saving [ 26 ]. Greater self-control is a key predictor of financial security, as persons with it tend to save and avoid debt [ 27 ].

Investment decisions are vital to financial well-being. Several elements increase financial well-being through investing decision-making. Financial literacy matters. According to Kamakia et al. [ 28 ], financially literate people make better investment decisions and have higher financial stability and well-being. Financial literacy improves investment decisions by helping people understand and analyze information [ 29 ]. Investment decision-making mediates mental budgeting and financial well-being [ 22 ]. Financial decision-making is influenced by mental budgeting. Credit cards can mix expenditures across budgeted categories and increase temporal distance between purchases and payments, making it harder to remember how much was spent on each [ 22 ]. This may lead to overspending or bad budget management, affecting finances. Self-control affects financial well-being through investment decisions. Self-control is the ability to manage behavior and make decisions that support long-term goals [ 30 ]. Research shows that self-control improves financial decisions. Higher self-control leads to more wise investment decisions and improved financial wellbeing [ 31 ].

Amid the Great Recession and COVID-19 pandemic, individuals, families, legislators, financial service providers, and financial educators need more understanding about financial well-being and how to improve it. This study makes significant literary contributions. First, this study examines the complex interaction between financial literacy, mental budgeting, self-control, and investment decision making, adding to financial wellbeing research. Examination of these structures together provides a more complete knowledge of financial wellbeing variables. Second, study examines mental budgeting and self-control in financial decision making to connect psychological and economic aspects. This integrated approach adds depth to the research by acknowledging that cognitive and behavioral processes affect financial wellbeing as well as economic considerations. Third, investment decision making as a mediator between financial literacy, mental budgeting, self-control, and financial health is another theoretical contribution. This mediation model shows how various factors affect financial well-being. It explains how financial knowledge, mental budgeting, and self-control affect financial outcomes. Financial educators, counselors, and policymakers can apply the study’s conclusions. By recognizing investment decision making as a mediator, it suggests interventions and education to improve financial literacy, mental budgeting, self-control, and financial health. The study emphasizes the need to evaluate many financial wellbeing elements at once. It promotes a holistic approach that emphasizes the interdependence of financial literacy, cognitive processes (mental budgeting), behavioral attributes (self-control), and investment decisions in financial well-being.

Rest of the paper is distributed among four sections: literature and hypotheses, methodology, results and conclusions.

2. Literature and hypotheses

The body of research that is now available on the topic of financial well-being hints that the concept of financial well-being is a subjective evaluation of one’s present and future financial situation [ 32 – 35 ]. The relevance of objective economic measurements, such as a consumer’s income, savings, and investments, credit score, credit card debt, regular mortgage payment, and tax payments, was stressed in much early academic research in the financial wellbeing field [ 36 – 38 ]. The subjective evaluation of financial wellbeing, on the other hand, focuses on the consumer’s self-assessment of his or her disposition, attitude, belief, and behaviors linked to money management [ 32 , 35 ]. According to this subjective interpretation of financial wellbeing, two people with comparable salaries or debt loads may regard their own financial wellbeing very differently. Due to importance of subjective financial wellbeing for researchers studying consumer behavior, financial institutions (FIs), non-profit organizations, businesses, and decision-makers in the government, study choose to investigate subjective side of this contrast. The relationships described in the study, which examines the impact of financial literacy, mental budgeting, and self-control on financial wellbeing with the mediating role of investment decision making, can be supported by several theories from the fields of economics, psychology, and behavioral economics, this study uses cognitive dissonance theory. Cognitive Dissonance Theory suggests that individuals strive for consistency in their beliefs and behaviors [ 39 ]. Financial literacy, mental budgeting, and self-control can influence the alignment of an individual’s financial decisions with their overall financial goals and values, reducing cognitive dissonance and enhancing financial wellbeing.

2.1. Financial literacy

Financial literacy refers to the knowledge of basic financial concepts, the ability to apply financial knowledge and skills in managing financial resources effectively, and the ability to make informed financial decisions to achieve financial welfare over a lifetime [ 40 – 44 ]. It involves understanding of financial matters, the ability to make conscious choice of financial products and services, and techniques for making appropriate financial decisions. Financial literacy translates into prosperity and sustainable development and helps in ensuring the financial sustainability of individuals, families, enterprises, and national economies [ 45 ]. It also includes a capacity and confidence to handle personal funds appropriately, short-term decision making and solid long-term financial thinking [ 46 ]. Moreover, being familiar with finance-related issues and making rational financial decisions based on basic financial knowledge are also crucial components of financial literacy [ 45 , 47 ]. Subjective financial knowledge, which refers to individuals’ self-evaluation of their financial knowledge, has been found to be a stronger predictor of financial behavior and subjective financial wellbeing than objective financial knowledge [ 48 ]. This indicates that individuals who perceive themselves to have higher financial knowledge tend to have higher levels of financial satisfaction and overall financial wellbeing. However, Balasubramnian and Sargent [ 49 ] investigate gaps between objective financial literacy and self-reported (perceived) financial literacy and report that individuals with high objective financial literacy make better financial decisions. A study by Joo and Grable [ 50 ] sought to identify the variables that affect financial contentment. According to the survey’s findings, financial contentment is directly influenced by factors including education level, financial literacy, risk, financial capability, financial activity, and financial demands. The findings demonstrated that improving financial behaviors increases levels of financial happiness at high knowledge and skill levels. As a result, their research suggested that financial literacy affected financial well-being directly. Another study [ 51 ] looked at the connections between 3,121 clients of a financial consulting firm’s financial activity, financial well-being, and health. According to their findings, those who have a greater level of financial well-being are less stressed, more motivated to manage their money, have better family relationships, and are physically and mentally healthier. Due to their advanced age and high level of vulnerability, retirees place a high priority on their financial well-being. They might experience physical or mental health effects from certain financial stress. In a research measuring financial literacy [ 52 ], authors found that even those with the information and skills to use that knowledge may not always behave as expected or experience advances in financial well-being due to a variety of factors. Such effects might be caused by cognitive biases, issues with self-control, family, economic, and institutional factors. However, another research [ 53 ] discovered that students’ perceptions of their financial well-being were significantly influenced by their financial literacy. Higher financial literacy correlates with greater financial well-being, according to a study [ 16 ] on financial literacy, financial well-being, and financial concerns. As a result, financial literacy is required to achieve financial well-being.

2.2. Mental budgeting

Mental budgeting is the cognitive process that people use to organize, evaluate, and keep track of financial activities [ 54 ]. It is a financial management technique that involves categorizing and monitoring expenses and income on a mental level [ 20 ]. Mental budgeting has an essential role to play in improving financial well-being because it can positively influence personal financial management [ 21 ] and consumer budgeting behavior [ 22 ]. Studies have shown that mental accounting can aid in monitoring personal spending, consumption, and investments and improve financial self-efficacy and control [ 55 ]. It can help socially excluded individuals make better financial decisions [ 56 ]. Mental accounting also affects budgeting, investing, and spending decisions [ 57 ]. Thus, it plays a central role in improving financial health and helps individuals, communities, and governments in managing their finances [ 58 ]. Mental budgeting helps individuals manage their finances better, make informed financial decisions, reducing financial stress, and improving financial self-efficacy. According to [ 59 ], financial literacy empowers individuals with knowledge and skills to manage their money effectively. Studies have shown that mental budgeting motivates and positively affects personal financial management [ 20 ] and reduces unduly risky personal investment behavior by triggering mental budgeting thoughts [ 21 ]. The impact of financial wellbeing and mental health are interlinked, and financial stress is a significant source of stress for many individuals, leading to mental health challenges [ 22 ]. Mental budgeting has been identified as a key factor in promoting financial wellbeing and reducing the risk of financial stress impacting an individual’s mental health. Multiple studies have been conducted to explore the relationship between mental budgeting and financial wellbeing in recent years. A systematic review by [ 60 ] identified the importance of proactive prevention, such as financial education and literacy, in reducing the burden of mental depression caused by financial stress. Similarly, mental budgeting was highlighted as a significant factor in promoting positive financial management behaviors, reducing financial stress, and improving financial wellbeing [ 61 ].

2.3. Self-control

Self-control, often called self-regulation, is the ability to control one’s conduct and reduce impulsivity [ 62 ]. Research shows that self-control and financial knowledge improve financial well-being [ 63 ]. Self-control, financial understanding, and financial literacy affect financial behavior and decision-making [ 64 ]. Self-control is needed to manage finances and prioritize goals in personal financial planning programs. A study on self-control, money attitude, and personal financial planning indicated that self-control affects financial planning [ 65 ]. Other research have linked self-control to occupational stress [ 66 ], self-directed learning readiness [ 67 ], and self-disgust [ 68 ].

The financial conduct of all different kinds of economic actors can be influenced by one’s level of self-control. According to Thaler and Shefrin [ 69 ], the concept of self-control may be applied to the individual as if they were an organization. According to Baumeister [ 70 ], people have a tendency to get confused as a result of conflicts between their behaviors and feelings; yet, inner strength creates self-control. The research conducted by [ 71 ] utilized three aspects of self-control: planning, monitoring, and commitment. The researchers came to the conclusion that self-control has a significant correlation with household net wealth and financial hardship. Self-control is beneficial for making decisions, having a strong will, and achieving success in the future, whether that achievement be being wealthy or prominent. The inability to exercise self-control can result in illogical decision making, a lack of confidence, and disastrous behavioral outcomes. The ability of a person to exercise self-control in the present and make sound choices will determine their potential financial well-being in the future. People tend to put their goals off till later, and when they want to improve their performance, they will sometimes try to restrict their behavior by placing stringent restrictions and deadlines on themselves.

According to [ 72 ], people who have deadlines that are too stringent tend to have less self-control than those who have deadlines that are not stringent enough. The difficulty of exercising self-control may also be understood through Shefrin and Thaler’s [ 73 ] Behavioral Life-Cycle (BLC). According to the BLC theory, the majority of individuals are preoccupied with the challenges and rewards of the now rather than the advantages of the long term. People create mental accounts in order to employ the resources that are accessible to them by categorizing their wealth into three categories, such as their present income, their current assets, and their future income [ 74 ]. According to Moffitt et al. [ 75 ], individuals lack control over their income and as a result spend more money on their immediate need rather than putting away more money for retirement and other future needs. People who have higher self-control also have better financial conduct and are able to take excellent care of their financial resources. Self-control is a key factor in both of these areas. They invest their resources in the most effective way possible [ 76 ]. They do not waste money on activities or products that are not important to their lives. People who have mastered the art of self-control have been at the forefront of society for eons, and they continue to do so now. This is due to the fact that self-control is a prerequisite for making sage choices and enjoying improved material circumstances. Households who have established saving guidelines save significantly more money than households that lack self-control. According to Kahneman [ 77 ], people who have cognitive capacities always manage their money in a way that allows them to attain their objectives and pay for their predictable costs. Planners and doers are the two types of people that Thaler and Shefrin [ 69 ] have determined people to be based on how well they exercise self-control over their finances. To them, planners are concerned with the utility across a lifetime, whereas doers are self-centered, shortsighted, and only exist for a short period of time. To live a prosperous and healthy life, both financially and emotionally, one of the goals that one must achieve is to have good financial well-being. This can only be accomplished via exercising self-control. Most of the studies measured self-control using Brief Self-Control Scale [ 78 ] and Short-Term Future Orientation Scale [ 59 ].

2.4. Investment decision making

Investment decision-making behavior refers to the process of making decisions related to finances and investments by individuals, which are influenced by various factors such as financial knowledge, financial attitude, financial behavior, self-control, psychological biases, and external environment. Financial knowledge plays an important role in making informed financial decisions, while financial behavior refers to the habits and behavior of individuals when managing finances. Self-control enables individuals to make rational and informed decisions while managing their finances. Psychological biases such as herding, heuristics, and prospect also affect the financial decision-making behavior of individuals. In summary, financial decision-making behavior is a complex process influenced by various rational and psychological factors that impact an individual’s financial wellbeing [ 79 – 82 ].

Financial or investment decision making behavior is a crucial determinant of financial well-being. It has been established that this behavior has a positive influence on financial well-being [ 83 ]. Moreover, financial well-being is directly and indirectly related to financial behavior [ 83 ]. Financial behavior is the result of putting expectations and values into action, and it is the link between expectations and financial well-being. Hence, better financial behavior translates to better financial well-being.

Several studies have shown that financial literacy and self-control are significant determinants of financial behavior and financial well-being. Research has found that financial literacy has a significant direct impact on financial well-being, and it affects financial well-being through financial behavior [ 84 ]. Similarly, financial self-efficacy and financial literacy positively influence financial well-being through financial behavior mediation [ 63 ].

Furthermore, the research has shown a positive relationship between parental financial socialization and financial literacy, financial behavior, and financial well-being. Delafrooz and Paim [ 85 ] found that higher levels of financial literacy led to better financial behavior, which in turn resulted in higher financial well-being. Studies have also explored the relationships between financial behavior, financial knowledge, and financial well-being. For instance, research [ 86 , 87 ] showed that subjective knowledge had stronger relationships with both financial behavior and financial well-being than objective knowledge. Further, it was established that money attitudes and financial knowledge significantly influenced financial behavior. Money attitudes have also been found to have a positive influence on financial management behavior, which in turn impacts financial well-being.

In conclusion, financial decision making behavior has a significant impact on financial well-being. Financial literacy, self-control, parental financial socialization, financial knowledge, and money attitude have been shown to influence financial behavior and thus impact financial well-being. It is crucial, therefore, to educate individuals on the importance of financial behavior and its role in achieving financial security.

Based on previous discussion, following hypotheses are developed:

H1: financial literacy has a significant direct impact on financial wellbeing.

H2: Mental budgeting has a significant direct impact on financial wellbeing.

H3: Self-control has a significant direct impact on financial wellbeing.

H4: Investment decision making has a significant direct impact on financial well-being.

H5: Investment decision making has a significant mediating effect between mental budgeting and financial well-being.

H6: Investment decision making has a significant mediating effect between financial literacy and financial well-being.

H7: Investment decision making has a significant mediating effect between self-control and financial well-being.

The conceptual model represents the selections of the variables from the critical review of the literature, and we expect their relationship in shape of figure. Moreover, our conceptual model of the study is given in Fig 1 .

An external file that holds a picture, illustration, etc.
Object name is pone.0294466.g001.jpg

3. Methodology

Sample was chosen using the criteria based on number of items. Convenience sampling was used to collect the data. Data was collected from Chinese university students using both physical and electronic channels which resulted in a set of 449 useable observations. Respondents included 245 male (55%) and 204 female (45%) students. 270 (60%) of these respondents belonged to business major. Table 1 shows the distribution of collected data.

3.2. Measures

We employed two separate measures to capture the diverse aspects of one’s financial well-being: one, the extent to which one suffered from financial anxiety, and the other is the degree to which one felt financially secure. For the purpose of quantifying anxiety caused by financial concerns, four items from [ 88 ] were selected. When calculating the level of financial security, [ 14 ] takes into account three different factors. The respondent was asked to rate how strongly they agreed or disagreed on a scale from 1 (strongly disagree) to 5 (strongly agree).

Seven items for measuring financial literacy have been adopted from a study [ 89 ].

Four items were adopted from a past study of mental budgeting andmanagement of household finance [ 59 ].

Self-control is quantified through a general measure which is a smaller version of the Brief Self-Control Scale [ 78 ]. It consists of five items, and the four items from the Short-Term Future Orientation Scale [ 59 ].

Scale for financial management or investment decision making behavior is adopted [ 90 ] and contains four components: overall financial management or decision making behavior, savings and investment, cash management and credit management.

List of the items used for measurement is given in S1 File .

3.3. Ethical statement

The present investigation pertains to the participation of human subjects, and therefore, ethical clearance was obtained subsequent to its evaluation by the research council of Henan Institute of Economics and Trade, located in Zhengzhou, Henan, China. The study was conducted in accordance with the research ethics guidelines of Henan Institute of Economics and Trade. Participants were accurately informed what is being studied, the benefits and risks of the study. Participants were also aware of their right to withdraw from the study at any point, all respondent gave their verbal informed consent for inclusion before they participated in the study.

3.4. Analysis

Path analysis and regression are two areas in which Structural Equation Modeling (SEM) excels. SEM is particularly useful when dealing with several variables. The PLS-SEM approach is being utilized throughout this investigation so that Path analysis may be performed. The benefits of utilizing PLS-SEM include the fact that it is more flexible with the sample sizes and is also less vulnerable to the violations of the multivariate data assumptions, such as normality of data. These are only few of the advantages of utilizing PLS-SEM. [ 91 ].

4.1. Measurement model

Stage one in the estimation of the measurement model included indicator reliability measurement through factor (outer) loadings, internal reliability measurement through composite reliability, convergent validity measurement through average variance extracted. The table shows that all of the indicators have loadings of more than 0.50 (range: 0.637–1.000), which is the value recommended by Nunnally [ 92 ] and Hair et al. [ 93 ]. All of the constructs obtained composite reliability values (range: 0.714 to 0.845) greater than 0.70, which is the value recommended by [ 94 – 96 ]. Table 2 shows that the Cronbach’s alpha ranges from 0.743 to 0.821; the statistically acceptable minimum value is 0.70 [ 94 – 96 ]. AVE values should be greater than 0.50 [ 93 , 97 ]. Our results meet these criteria.

4.2. Structural model

The path coefficients were assessed in order to test the hypotheses and determine the association between the psychological characteristics of the young people and their financial conduct as well as their overall financial well-being. The value of a variable’s path coefficient indicates the extent to which that variable was directly influenced by another variable. A value that is closer to 1 indicates that there is a stronger correlation, while a value that is closer to 0 indicates that there is a weaker relationship. Values close to zero are not statistically significant. Path coefficients are listed in the Table 3 . Results indicate that all three independent variable (financial literacy, mental budgeting and self-control) are positively affect the dependent variable (financial-wellbeing).

4.3. Mediation

Baron and Kenny [ 98 ] argued for simultaneously considering direct and indirect effects to conclude mediation tests. We found that the direct effects of the independent variables (financial literacy and investment decision making behavior) on the dependent variable (financial well-being) were positive and statistically significant. Similar is the case for other two paths i.e. mental budgeting and investment decision making behavior and self-control and investment decision making behavior. The indirect effects in the presence of the mediator (investment decision making behavior) is also statistically significant. This concludes into partial mediation. The mediation results are summarized in Table 4 .

5. Conclusion

Based on this investigation, it is evident that financial literacy, mental budgeting, and self-control have a positive and significant impact on subjective financial well-being. The findings suggest that individuals who possess a higher level of financial literacy are more likely to experience better financial well-being. This implies that having a strong understanding of financial concepts, such as budgeting, saving, and investing, can contribute to improved financial outcomes. These findings are consistent to previous literature [ 45 – 49 ]. Furthermore, individuals who engage in mental budgeting, which involves mentally categorizing and tracking their expenses, exhibit higher levels of financial well-being. This practice enables them to have a better grasp of their financial situation and make informed decisions regarding their spending habits and financial goals. Previous literature support this finding [ 22 , 56 , 60 , 61 ]. Similarly, self-control emerges as a crucial factor influencing financial well-being. Individuals who exercise self-control, such as resisting impulsive purchases and sticking to their financial plans, are more likely to achieve better financial outcomes. This finding suggests that maintaining discipline and self-restraint in financial matters can significantly contribute to one’s financial well-being. This outcome is also in line with the existing empirical evidence [ 63 , 64 , 69 ]. Results reveal support for the mediator, investment decision-making behavior, which partially mediates the relationship between the independent variables (financial literacy, mental budgeting, and self-control) and financial well-being. The findings indicate that individuals who possess higher levels of financial literacy, engage in effective mental budgeting, and exercise self-control are more likely to exhibit positive investment decision-making behavior. This, in turn, contributes to their overall financial well-being. The partial mediation suggests that investment decision-making behavior accounts for a portion of the relationship between the independent variables and financial well-being, while other factors may also be involved. These results have important implications for understanding the pathways through which financial literacy, mental budgeting, and self-control influence financial well-being. The presence of mediation indicates that investment decision-making behavior plays a role in translating the effects of these independent variables into improved financial outcomes. It highlights the significance of making informed investment decisions and aligning them with one’s financial goals [ 79 – 82 ]. Overall, the results of this investigation underscore the importance of financial literacy, mental budgeting, and self-control in shaping an individual’s financial well-being. To enhance financial well-being, individuals should strive to improve their financial knowledge, develop effective mental budgeting strategies, and cultivate self-control in their financial decision-making processes.

This study has several theoretical and practical implications.

5.1. Theoretical implications

Enriching the understanding of financial well-being: This study contributes to the existing body of knowledge by providing empirical evidence on the impact of financial literacy, mental budgeting, and self-control on financial well-being. It enhances our theoretical understanding of the factors that influence individuals’ financial well-being and highlights the importance of these variables in achieving positive financial outcomes.

Supporting the importance of financial education: The findings underscore the significance of financial literacy in promoting financial well-being. This emphasizes the need for educational institutions, policymakers, and financial institutions to prioritize and promote financial education programs. It highlights the potential benefits of equipping individuals with the necessary knowledge and skills to make informed financial decisions and improve their financial well-being.

Emphasizing the role of behavioral factors: This study highlights the role of behavioral factors, such as mental budgeting and self-control, in shaping financial well-being. It supports the growing body of research that recognizes the impact of psychological and behavioral aspects on financial outcomes. These findings can contribute to the development of theories and frameworks that integrate behavioral economics and finance, providing a more comprehensive understanding of individuals’ financial well-being.

5.2. Practical implications

Policy interventions and financial education programs: Policymakers can utilize these findings to design and implement effective financial education initiatives that focus on improving financial literacy, promoting mental budgeting practices, and enhancing self-control. These programs can be targeted towards various age groups and socio-economic backgrounds to ensure wider accessibility and inclusivity.

Financial counseling and guidance: Financial institutions and professionals can leverage the insights from this study to provide personalized financial counseling and guidance to their clients. By addressing specific areas of financial literacy, mental budgeting, and self-control, individuals can receive tailored support to enhance their financial well-being and achieve their financial goals.

Development of digital tools and resources: Technology can play a crucial role in improving financial well-being. Based on the findings of this study, the development of digital tools, mobile applications, and online platforms can be tailored to provide financial education, facilitate mental budgeting, and encourage self-control. These resources can provide real-time feedback, personalized recommendations, and practical tips to help individuals manage their finances effectively.

Overall, the theoretical implications of this study contribute to the existing knowledge base, while the practical implications offer actionable insights for policymakers, financial institutions, and individuals to promote financial well-being and improve financial outcomes.

5.3. Limitations

The study’s findings may be limited by the characteristics of the sample used. The investigation has focused on a specific demographic and geographic sample (i.e. students), which could limit the generalizability of the results to a broader population. Future research could consider using larger and more diverse samples to enhance the external validity of the findings. The study employed a cross-sectional design, which captures data at a specific point in time. This design limitation prevents establishing causal relationships between the variables investigated. To address this limitation, future research could employ longitudinal or experimental designs to assess the causal effects of financial literacy, mental budgeting, self-control, and investment decision-making behavior on financial well-being. The study relied on self-reported measures, which may introduce response biases and social desirability effects. Participants might have provided answers that they believed were expected or socially acceptable rather than reflecting their true behaviors or beliefs. Future studies could consider incorporating objective measures or alternative data sources to enhance the validity of the findings.

5.4. Further research directions

Investigating additional mediating and moderating variables could provide a more comprehensive understanding of the relationships between financial literacy, mental budgeting, self-control, investment decision-making behavior, and financial well-being. Factors such as risk tolerance, financial attitudes, social influences, and psychological factors could be explored to uncover their potential impact on the relationships of interest. Future research could explore the long-term effects of financial literacy, mental budgeting, and self-control on financial well-being. Assessing the sustainability and durability of these effects over time could shed light on the long-term benefits of cultivating these skills and behaviors. Investigating the effectiveness of interventions aimed at improving financial literacy, mental budgeting, and self-control could provide valuable insights. Assessing the impact of educational programs, financial counseling, and interventions on individuals’ financial well-being and investment decision-making behavior would help identify the most effective strategies for promoting positive financial outcomes. Exploring the role of cultural and contextual factors in the relationships of interest could offer valuable insights. Different cultures and socio-economic contexts may influence the impact of financial literacy, mental budgeting, self-control, and investment decision-making behavior on financial well-being. Examining these factors would allow for a more nuanced understanding of how these relationships manifest across diverse populations. Addressing these limitations and pursuing these research directions can further advance the knowledge and understanding of the impact of financial literacy, mental budgeting, self-control, investment decision-making behavior, and their interrelationships on financial well-being.

Supporting information

Acknowledgments.

This paper is a general project of 2021 Henan Higher Education Teaching Reform Research and Practice Project (Research and Practice of "Integration of Competition and Teaching" in Accounting major under the background of National Vocational College Skills Competition 2021SJGLX826)

Funding Statement

The author(s) received no specific funding for this work.

Data Availability

PLoS One. 2023; 18(11): e0294466.

Decision Letter 0

17 Jul 2023

PONE-D-23-18334Impact of Financial Literacy, Mental Budgeting and Self Control on Financial Wellbeing: Mediating Impact of Investment Decision MakingPLOS ONE

Dear Dr. Ruofan Bai,

Thank you for submitting your manuscript to PLOS ONE. After careful consideration, we feel that it has merit but does not fully meet PLOS ONE’s publication criteria as it currently stands. Therefore, we invite you to submit a revised version of the manuscript that addresses the points raised during the review process.

The paper investigate the Impact of Financial Literacy, Mental Budgeting and Self Control on Financial Wellbeing: Mediating Impact of Investment Decision Making". Its findings are interesting but requires major revisions before it can be considered. My comments are as follows:

You need state clearly the contributions of the paper. For example, "Consequently, the current paper seeks to make the following contributions to the existing literature. First,…, Second,…., Third, …, Fourth,… and so on". The description of the contribution needs to be more forensic, needs to be more focussed.
The authors should discuss the relevant theories in detail and relate their findings to of financial literacy, mental budgeting, and self-control on Financial Wellbeing.
Highlight their economic and research and policy implications. In the discussion of the results please focus on the novel findings and insights vis-à-vis the existing literature
Theoretical framework may increase its implication, Read the below related paper for methodology.

R. M. Ammar Zahid.,Rafique., S. Khurshid., M. Khan., W. Ikram Ullah (2023). Does women’s Financial Literacy accelerate Financial Inclusion? Evidence from Pakistan. Journal of the Knowledge Economy , DOI: https://doi.org/10.1007/s13132-023-01272-2

I recommend Major REVISIONS for publication after the author/s addressing the above queries and suggestions.

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Reviewer #1: No

Reviewer #2: Yes

Reviewer #3: Partly

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Reviewer #1: Yes

Reviewer #2: No

Reviewer #3: Yes

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Please use the space provided to explain your answers to the questions above. You may also include additional comments for the author, including concerns about dual publication, research ethics, or publication ethics. (Please upload your review as an attachment if it exceeds 20,000 characters)

Reviewer #1: Overall: I think this is a major world problem and a significant research topic. I would like to see more than perception self-report measures to make the claims in this paper. Improving actual financial literacy vs. perceived financial literacy (self-report impressions that you have here) may lead to different recommendations. You lack important covariates. You may be able to rework this to be about perceptions influencing other perceptions and that might work. After all, you make the point that perceived FWB is more about the individual’s interpretation, not actual financial status. You have a specific population (students) that may not have had extensive experience with financial decisions. That is a limitation (at least acknowledge it).

Introduction

You may be over playing the contribution to mental health. It is enough to indicate that financial stress is an important stressor. This can be shortened, perhaps substantially. You do not build up to your research questions (such that they are a logical next step in addressing financial well-being). For instance, you never mention mental budgeting or investment decisions prior to line 161 where they appear as a surprise. You have explained the problem but then you need to show how your work will address it. That link needs strengthening. You mention that many studies do not include a full array of variables, which is true, then you drop that aspect and have RQs that are lean (single variable), the very thing you criticize. You then have a paragraph about the importance of increasing FWB with factors not in your RQs (like retirement planning). Create a more concise organization: describe the problem (which is done extensively), how you address the problem (missing, RQs are not really doing the job here), the major findings and the implications given the findings. The specific RQs usually come after hypothesis.

Literature and Hypothesis

Just listing your variables and the literature for that variable is good but needs some introduction prior to jumping into them. Why start with FL? Is this for perceived and actual (measured) FL or just actual FL? In many models they have similar correlations on financial behaviors but mean slightly different things. Not sure what you mean here: “Managing finances for personal needs aligns with

financial literacy from a practical perspective.” (Line 193). Your comment: Financial literacy and financial well-being have been the subjects of separate research up until this point is unclear.” (Line 198) Most of the literature on FL is impact on financial habits or financial outcomes, which you argue leads to FWB. Then you start discussing FWB, leaving FL. This seems like the place to put your RQ about FL.

In the second paragraph about mental budgeting you pivot to FL, (Line 230) and then back to mental budgeting. In line 235 you say mental budgeting has the “most” influence on financial behavior – more than any other variable – with one citation given. I do not agree as I look at Xiao & O’Neill (2018). The beta for that variable is much smaller than several other significant variables in the OLS on financial well-being. Further, other studies have found it to be significant but not with a higher effect size over other variables such as education and income. The discussion on self-control does not mention how it was measured in these studies that found it correlated with positive financial outcomes. Is self-control nudgeable (vs. FL)?

Line 324: FL and self-control are significant in financial behavior and well-being. Seems to be leaving off some major variables (e.g., education, income, demographics). The discussion needs tighter organization. You then pivot to financial education and subjective FL in the mental budgeting section. Then parental education comes in (before individual’s education?) and money attitudes.

I might introduce the full family of variables that link to financial behaviors and FWB and then one at a time discuss them, including how they are measured in the literature, leading to each RQ.

Method and Findings

Please put the results on Fig 1.

Wonder if students are typical of the national studies done in the literature? Most have not even started their careers or thought about emergency savings. I wonder about the ability to generalize from this.

Actual FL has been measured by the same 5 questions for decades and include, for example, the ability to figure compounding interest at 2% for one year. See Lusardi’s line of research. I believe you have measure “perceived financial literacy,” not actual FL. Perceived is the person’s belief about financial competency. This differs from actual competency. For instance, for a discussion of the difference of these two, see:

Balasubramnian, Bhanu, and Carol Springer Sargent. “Impact of Inflated Perceptions of Financial Literacy on Financial Decision Making.” Journal of Economic Psychology, vol. 80, 2020. https://doi.org/10.1016/j.joep.2020.102306 .

You have failed to control for very important demographic information, especially education and income. Further, your FL variable, normally measured by an actual “test” of financial comprehension, is a FL perception self-report. Highly educated individuals may have better self-control and so you cannot tell which is giving you the result without controlling for these important covariates. You rightly criticize the literature for not including all the variables and then you do it too.

You may have a finding here but not the one you discuss. You have found that one’s view about financial competence correlates with financial behaviors and financial well-being. And how do we know the direction? Maybe strong financial behaviors (paying things on line for instance) makes the individual feel more able (PFL) and in control (self-control). Could it be the perceptions follow from good habits and perceptions lead to FWB? You mention that two different individuals with the same financial circumstances can have different SWB perceptions. This would be a different paper but may be possible with this dataset.

Going forward, consider a more diverse sample, measuring AFL, and including covariates.

Small items to address:

• I would not characterize the cognitive aspects as a “personality” type. (line 155)

• Line 161: Remove “to”

Reviewer #2: Dear Authors

Why financial literacy and financial knowledge are not operationalized as multi-dimensional constructs.

Financial literacy is measured by both subjective and objective approaches. Why authors adopted subjective approach only.

Why Baron and Kenny's approach of mediation was adopted. Baron and Kenny's approach is outdated an primitive approach of mediation.

Reviewer #3: The paper entitled” Impact of Financial Literacy, Mental Budgeting and Self Control on Financial Wellbeing: Mediating Impact of Investment Decision Making” deals with a very interesting topic and it included interesting ideas. In general, I appreciate the aims of this work; it is quite interesting and informative to most readers of this field.

However, I have the following comments that hopefully help the authors improve their paper:

• The introduction section is too long. The reader is lost with the overwhelming amount of background information that relates to the topic but is not necessarily relevant for your research. It may be wise to remove some paragraphs if they are not strongly related to the main issue.

• The structure (outline) of the paper could be given at the end of the introductory chapter.

• I suggest that the authors add a research method diagram. This will provide a snapshot of the research steps followed and will help the reader in a clearer understanding of the paper.

• In relation to literature review, I would strongly encourage authors to provide a summary table of comprehensive literature review that will not only identify the gaps in the literature but also strengthen the contribution of this work.

• What are the limitations of the study in terms of the proposed method, data used, approaches, and/or analysis?

• How the results of this study can be generalized to other regions?

• The authors should convince the readers, that their contribution is so important. These issues deserve a deeper discussion: What are the managerial implications from this research? How does this understanding help people to make better decisions? How decision or policy makers could benefit from this study.

• As usual a final thorough proof-reading is recommended.

I wish the author(s) all the best for their research and that these comments will be useful to them in improving the paper.

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Reviewer #2: Yes: Suhail Ahmad Bhat

Reviewer #3: No

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Submitted filename: PLOS ONE-D-23-18334_review SARGENT Financial Literacy Self Control.pdf.pdf

Author response to Decision Letter 0

18 Sep 2023

RESPONSE TO EDITOR

Contributions are rewritten clearly.

Relevant theory is added.

Implications of the findings are added.

RESPONSE TO REVIEWER 1

Concerns about objectives and subjective financial wellbeing are addressed and it is mentioned that author is interested in the later.

Introduction is shortened.

After discussing the problem, solution (i.e. role of selected factors) is also discussed.

Comments which were not matched as indicated by the reviewer are either removed or adjusted.

Education, income and demographics are ignored because of the sample, as respondents do not have very diverse characteristics.

RESPONSE TO REVIEWER 2

Item 1: Why financial literacy and financial knowledge are not operationalized as multi-dimensional constructs?

Operationalizing "financial literacy" as a uni-dimensional construct can have some advantages. Here are some reasons why author choose to operationalize financial literacy as a uni-dimensional construct:

Simplicity: A uni-dimensional approach simplifies measurement and analysis. It reduces the complexity associated with measuring multiple dimensions of financial literacy, making it easier to administer surveys, collect data, and analyze results.

Ease of Communication: Communicating and interpreting the results of a uni-dimensional financial literacy measure is straightforward. It allows for clearer communication of findings to policymakers, educators, and the general public.

Comparison: Uni-dimensional measures make it easier to compare individuals or groups based on a single scale, facilitating straightforward comparisons between different demographics, regions, or time periods.

Policy Implications: A uni-dimensional measure can be more effective for guiding policy decisions, as it provides a clear overall picture of financial literacy levels within a population. Policymakers may find it easier to target interventions when working with a single metric.

Apart from these reasons, the items chosen to measure financial literacy are broad and fulfill the researcher’s objective.

Item 2: Financial literacy is measured by both subjective and objective approaches. Why authors adopted subjective approach only?

Here's why author choose subjective approach:

Self-assessment and self-awareness: Subjective measures allow individuals to assess their own financial knowledge, skills, and confidence in managing their finances. This self-awareness can be valuable because it helps individuals recognize their own areas of weakness and take steps to improve their financial literacy. It can also serve as a motivation for individuals to seek out financial education and make positive changes in their financial behaviors.

Practicality and cost-effectiveness: Subjective measures are often easier and more cost-effective to implement than objective measures, which may require standardized tests or evaluations by financial experts. Subjective assessments can be administered through surveys or questionnaires, making them accessible to a wider range of people and organizations, including schools, employers, and financial institutions.

Cultural and contextual sensitivity: Financial literacy is not a one-size-fits-all concept. It can vary based on cultural, socioeconomic, and personal factors. Subjective assessments can capture the nuances of an individual's financial knowledge and attitudes, allowing for a more context-specific understanding of their financial literacy.

Focus on behavior and decision-making: Subjective measures often include questions about financial attitudes, behaviors, and decision-making, which are critical components of financial literacy. Understanding how individuals perceive and approach financial choices can provide valuable insights for designing targeted financial education programs and interventions.

Item 3: Why Baron and Kenny's approach of mediation was adopted?

Baron and Kenny's approach to mediation analysis is a widely used and influential method in the field of psychology and social sciences for investigating the mechanisms by which an independent variable affects a dependent variable through an intermediate variable (i.e., the mediator).

Clarity and Transparency: Baron and Kenny's approach provides a clear and step-by-step framework for conducting mediation analysis. It helps researchers systematically test the hypothesized mediation model, making the process more transparent and accessible.

Causal Inference: The approach emphasizes the establishment of causality in mediation relationships. It requires researchers to demonstrate that three conditions are met: (a) the independent variable significantly predicts the mediator, (b) the mediator significantly predicts the dependent variable while controlling for the independent variable, and (c) the direct effect of the independent variable on the dependent variable is reduced or becomes non-significant when the mediator is included in the model. This helps researchers make stronger claims about causality.

Practicality: Baron and Kenny's approach is relatively straightforward to implement. It does not require advanced statistical techniques or specialized software, making it accessible to a wide range of researchers.

Interpretability: The approach provides coefficients that are easily interpretable. Researchers can directly assess the size and significance of the indirect (mediation) effect, which is often of primary interest in mediation analysis.

In summary, Baron and Kenny's approach to mediation analysis is preferred for its simplicity, clarity, and emphasis on causality.

RESPONSE TO REVIEWER 3

The structure of the paper is given.

Limitations are identified.

Implications are discussed.

Submitted filename: Response to Reviewers.docx

Decision Letter 1

Impact of Financial Literacy, Mental Budgeting and Self Control on Financial Wellbeing: Mediating Impact of Investment Decision Making

PONE-D-23-18334R1

Dear Dr. Bai,

We’re pleased to inform you that your manuscript has been judged scientifically suitable for publication and will be formally accepted for publication once it meets all outstanding technical requirements.

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Reviewer #2: All comments have been addressed

Reviewer #3: (No Response)

2. Is the manuscript technically sound, and do the data support the conclusions?

3. Has the statistical analysis been performed appropriately and rigorously?

4. Have the authors made all data underlying the findings in their manuscript fully available?

5. Is the manuscript presented in an intelligible fashion and written in standard English?

6. Review Comments to the Author

Reviewer #2: All the issues raised have been addressed by the author/s. the paper is now in a position to be published in the journal

Reviewer #3: The paper has significantly improved as compared to the previous version. Indeed, the authors tried to improve it, and the main the weaknesses are solved.

Thus, in my opinion, the paper is on the borderline recommendable for publication.

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Acceptance letter

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Financial literacy is the education and understanding of various financial areas. This topic focuses on the ability to manage personal finance matters in an efficient manner, and it includes the ...
Importance of Financial Literacy: [Essay Example], 1983 words
Pailella, P. (2016). Financial Literacy and Entrepreneurial Success: The Moderating Role of Financial Knowledge and Experience. Journal of Small Business Management, 54(4), 1175-1192. Parcheta, M. (2021). The Role of Financial Literacy in Women Entrepreneurship Development. European Financial and Accounting Journal, 16(2), 87-100
PDF Financial literacy and financial well-being: Evidence from the US
Results show that, in all specifications, financial literacy is linked to planning for retirement, the ability to come up with $2,000 within a month, and having a manageable level of debt. Table 4. Financial literacy and financial well-being in the National Financial Capability Study (%). Full sample.
PDF The importance of financial literacy and its impact on financial wellbeing
literacy and behavior and the impact of financial literacy on individuals as well as the macro-economy. The number of papers on financial literacy has increased exponentially over the past decade.6 Financial literacy has become an official field of study, with its own Journal of Economic Literature code (G53).
Financial literacy and the need for financial education: evidence and
2.2 Cross-country comparison. The first examination of financial literacy using the Big Three was possible due to a special module on financial literacy and retirement planning that Lusardi and Mitchell designed for the 2004 Health and Retirement Study (HRS), which is a survey of Americans over age 50.
PDF Roger W Ferguson, Jr: Reflections on financial literacy
financial well-being. Sometimes our efforts will prove frustrating or appear to be failing, and in these cases we need to do everything we can to understand the failure and learn from it. Recently, the Jump-Start Coalition for Personal Financial Literacy released results of its third study of financial literacy among high-school students.
Information for Writing a Financial Literacy Essay
National Financial Educators Council supports those that are raising awareness for financial education. Complimentary financial literacy essay resources.
Financial literacy, motivated reasoning, and gender : essays in
PDF | On Jun 5, 2019, Thérèse Lind published Financial literacy, motivated reasoning, and gender : essays in behavioral economics | Find, read and cite all the research you need on ResearchGate
Financial Literacy around the World: What We Can Learn from the
Introduction. It is widely agreed that consumers in the 21 st century face a growing need for financial literacy for a number of reasons, including: the increasing complexity of existing financial products and the introduction of new products into the market; the fact that globalization increases the financial products offered in all countries, including those with previously less developed ...
Financial Literacy Essays (Examples)
PAGES 5 WORDS 1621. Money Management. Basic financial literacy is sorely lacking in today's America, and the results affect us all. For some, basic financial literacy is a personal issue, and it is that, but it is also a social issue because high debt levels affect everybody when they contribute to economic volatility.
FINANCIAL LITERACY REFLECTION ESSAY. LUANA.docx
Luana Ferreira INFO -100 December 6, 2020 Financial Literacy Reflection Essay The most significant thing I have learned about the Financial Literacy unit is how I should budget and don't spend money with things that are not necessary. This was important to me since I could read so many articles in this class about how to budget and if you spend with things that you don't need every day, it ...
Writing Prompts for Weekly Journaling in Personal Finance
Thanks to Brian Page of Reading High School for getting the tweets started and for the multiple contributors to his initial inquiry: What reflection prompts should be required in a student financial literacy journal, as least weekly? The responses are rolling in: Brian Page (and NGPF podcast guest) What did you learn that you will put to practice now or in the near future?
What is financial literacy? (article)
Overall, financial literacy is about empowering yourself with the knowledge and skills to make smart decisions with your money. It is a lifelong journey, but one that is well worth taking. Questions. Tips & Thanks.
The Ultimate Guide to Financial Literacy for Adults
Financial literacy is the ability to understand and make use of a variety of financial skills. ... These include white papers, government data, original reporting, and interviews with industry ...
Importance of Money Management and Financial Literacy for Students
Atkinson, A. and Messy, F. (2012), "Measuring financial literacy: results of the OECD/International Network on Financial Education (INFE) Pilot study", Working Paper No. 15, OECD Working Papers on Finance, Insurance and Private Pensions, OECD Publishing, Paris.
We should be teaching financial literacy in NY's high schools
By Betty A. Rosa and Thomas P. DiNapoli Guest essay February 5, 2024. Financial literacy should be taught in all New York schools. When students take a financial literacy course, they learn ...
PDF Best Practices in Financial Literacy: A Case Study
The Best Practices in Action. 1. Ask learners what they want to learn about personal finance topics and financial decisions. When teaching his personal finance units, Eli tries to schedule local business people (immigrant business owners in particular) to present on topics that are of high interest to his learners.
Financial Literacy Reflection Essay
Financial Literacy Essay There was a startling fact I came across wondering through the internet. I learned that the average American household has a credit card debt of $8,000. Not only does the amount of money scare me, what scares me most is that the "average" household has a debt of $8,000.
Impact of financial literacy, mental budgeting and self control on
2. Literature and hypotheses. The body of research that is now available on the topic of financial well-being hints that the concept of financial well-being is a subjective evaluation of one's present and future financial situation [32-35].The relevance of objective economic measurements, such as a consumer's income, savings, and investments, credit score, credit card debt, regular ...
Reflection Essay
Tmmbry Harris UNV-103 University Success June 28, 2020 Dr. LaVonne Riggs-Zeigen Reflection: Personal Finance Basics This week there are different lessons in personal finance and financial literacy that I have learned. However, the lesson that stands out to me the most is successful money management.
Financial Literacy Reflection
essay about financial literacy financial literacy reflection jessica leonard college of humanities and social sciences, grand canyon university unv 103: Skip to document. ... Financial Literacy Reflection This week we learned about financial literacy and fiscal responsibility. The cost of college has increased drastically in recent years ...