Why Financial Literacy Matters

Money is everywhere. It is a part of our lives almost everywhere we go and everything we do. Financial literacy is about understanding those interactions and being able to make the best financial decisions for ourselves that we can.

I almost feel like I could stop writing there, that I have summed up the reason that learning about money is important, but it is so much more than that. Financial literacy starts with the smallest transactions and the earliest age, when we first become aware of the exchange. Maybe your first financial decision was from a birthday gift or an allowance that you got to decide how to spend. It was probably so long ago that you don’t know when you got to make your first money-related choice.

We absorb attitudes, habits, assumptions, and biases from the people and circumstances around us. Our first lessons about money were based on how our families and those around us appear to have made their financial decisions. I used ‘appear’ intentionally because we can’t always know someone else’s motivation or in-their-head voices. And, of course, they may not even be aware of habits or biases they unintentionally picked up from how they interpreted their family’s and friend’s financial activities when they were growing up. It is not in your best interest to base your financial decisions on the habits of your great grandfather’s financial situation.

There’s a major reason why it is important to learn about money because it’s your money. The more you know about money, the more you are able to base your decisions intentionally in the interest of your own goals, and your own priorities. The world is continually changing, and while the form of money evolves, from cash to check to credit card to money apps, the concept of money does not.

Money is the medium of exchange through which we function as a society. If you don’t understand it, you are playing from a position of weakness in every exchange. If you are making decisions based on emotion or unconscious biases you may not be working toward your own best interests.

Financial literacy includes learning about the daily decisions such as grocery shopping or going out to eat. It includes decisions you make annually such as choosing health or car insurance or preparing your taxes. It also includes decisions you can make on your own schedule such as retirement savings contributions or managing investments. You make more financial decisions in a month than you are aware of.

The quality of your decision-making in these examples and other opportunities in your life will impact your financial situation today and in the future. The better you understand what your options are the more you can build and protect your financial future.

So, where are you learning about money? Who are your experts, your mentors, and your confidants? Are you making sure that you don’t transfer from one set of biases to another? It’s important to make sure you are getting quality information from informed sources.

The more you know about money, the better decisions you make about finances, the more control you have over your financial future. Remember, the money you save is your own.

Check out my podcast, Marci Talks Money (and Life). Available wherever you listen to podcasts.