when you are financially literate you have the essential foundation for a smart relationship with money this can help start a lifelong journey of learning about the financial aspects of your life the earlier you start to become financially literate the better off you ll be because education is the key to a successful financial future 
investopedia paige mclaughlinunderstanding financial literacysince about 2000 financial products and services have become increasingly widespread throughout society whereas earlier generations of u s residents may have purchased goods primarily in cash various credit products are popular today such as credit and debit cards and electronic transfers a 2021 survey by the federal reserve bank of san francisco revealed that 28 of all payments were made via credit card with only 20 being made in cash 1given the importance of finance in modern society a lack of financial literacy can be very damaging to an individual s long term financial success being financially illiterate can lead to many pitfalls such as being more likely to accumulate unsustainable debt burdens either through poor spending decisions or a lack of long term preparation this in turn can lead to poor credit bankruptcy housing foreclosure and other negative consequences thankfully there are now more resources than ever for those wishing to educate themselves about financial topics one such resource is the u s government sponsored financial literacy and education commission which offers a range of free learning opportunities 2financial literacy can help protect individuals from becoming victims of financial fraud a type of crime that is becoming more commonplace scope of financial literacyalthough many skills might fall under the umbrella of financial literacy popular examples include household budgeting learning how to manage and pay off debts and evaluating the tradeoffs between different credit and investment products these skills often require at least a working knowledge of key financial concepts such as compound interest and the time value of money financial literacy can cover short and long term financial strategies the strategy you use will depend on several factors such as your age investment time horizon and risk tolerance financial literacy also encompasses knowing how investment decisions made today will impact your tax liabilities in the future financial products such as mortgages student loans health insurance and self directed investment accounts have grown in importance it is imperative for individuals to understand how to use them responsibly it s also important to know which investment vehicles are best to use when saving whether for a financial goal like buying a home or for retirement other developments in finance such as e wallets digital money and p2p lending can be convenient and cost effective but require that consumers be educated adequately to use them to their advantage 