FAQs
Table 1 The “Big Three” financial literacy questions
- Suppose you had $100 in a savings account and the interest rate was 2% per year. ...
- Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. ...
- Please tell me whether this statement is true or false.
What are the 3 keys to financial literacy? ›
Financial literacy is the knowledge and ability to manage your money in a way that helps you grow stability and feel confident and resilient. Key aspects of financial literacy are budgeting, saving and managing debt.
What is the best book for financial literacy? ›
10 Financial Literacy Books to Learn From
- Total Money Makeover by Dave Ramsey.
- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money – That the Poor and Middle Class Do Not! ...
- How to Retire Early: Your Guide to Getting Rich Slowly and Retiring on Less by Robert and Robin Charlton.
What are the 5 key components of financial literacy? ›
The U.S. FLEC highlights five principles as the building blocks of financial literacy, known as the MyMoney Five.
- EARN.
- SPEND.
- SAVE & INVEST.
- BORROW.
- PROTECT.
What are the three C's in financial literacy? ›
Students classify those characteristics based on the three C's of credit (capacity, character, and collateral), assess the riskiness of lending to that individual based on these characteristics, and then decide whether or not to approve or deny the loan request.
What are the 4 steps to financial literacy? ›
Key steps to attaining financial literacy include learning how to create a budget, track spending, pay off debt, and plan for retirement.
What is the golden rule of financial literacy? ›
By combining the golden rule of “Pay Yourself First” with the 50/30/20 rule, you create a comprehensive approach to managing your finances. The golden rule ensures that savings and investments are prioritized, while the 50/30/20 rule provides a framework for allocating your income across different expense categories.
How do I teach myself financial literacy? ›
6 ways to improve your financial literacy
- Subscribe to financial newsletters. For free financial news in your inbox, try subscribing to financial newsletters from trusted sources. ...
- Listen to financial podcasts. ...
- Read personal finance books. ...
- Use social media. ...
- Keep a budget. ...
- Talk to a financial professional.
What is the first rule of financial literacy? ›
1. Budget your money. In general, there are four main uses for money: spending, saving, investing and giving away. Finding the right balance among these four categories is essential, and a budget can be a very useful tool to help you accomplish this.
Who has the highest financial literacy in the world? ›
The countries with the highest financial literacy rates are Australia, Canada, Denmark, Finland, Germany, Israel, the Netherlands, Norway, Sweden, and the United Kingdom, where about 65 percent or more of adults are financially literate.
Key aspects of financial literacy include knowing how to create a budget, plan for retirement, manage debt, and track personal spending. Financial literacy can be obtained through reading books, listening to podcasts, subscribing to financial content, or talking to a financial professional.
Is financial literacy a hard skill? ›
Employers value both hard skills and soft skills when hiring candidates. Students completing a co-op placement may also be asked to complete a qualification test to validate their hard skills such as financial literacy.
What is the 80-10-10 rule of saving? ›
When following the 10-10-80 rule, you take your income and divide it into three parts: 10% goes into your savings, and the other 10% is given away, either as charitable donations or to help others. The remaining 80% is yours to live on, and you can spend it on bills, groceries, Netflix subscriptions, etc.
What is the best way to learn finance for beginners? ›
The Bottom Line
Listening to podcasts and reading books about specific areas of finance that interest you help break down more complex financial topics and speed up the learning process. There are also many paid and free courses out there that offer courses in different areas of finance and investing.
What are the 5 pillars of financial literacy? ›
It's not about earning a certain amount of money or having a specific figure saved; it's about your knowledge and comfort with the financial system. Financial literacy has five components: earn, spend, save and invest, borrow, and protect.
What are the three basic questions of finance? ›
What are the three basic questions addressed by the study of finance? What long-term investments should the firm undertake? How should the firm raise money to fund these decisions? How can the firm best manage its cash flows as they arise in its day-to-day operations?
What are the big 3 questions? ›
The Three Big Questions strategy challenges readers to annotate in the margins by marking passages that answer the questions: "What surprised me?", "What did the author think I already knew?", and "What challenged, changed, or confirmed what I already knew?".
What are the essential questions for financial literacy? ›
How do financial goals vary across a person's lifetime? In what ways does money management impact reaching financial goals? What constitutes sound financial decision making?
What are the big three financial statements? ›
The income statement, balance sheet, and statement of cash flows are required financial statements. These three statements are informative tools that traders can use to analyze a company's financial strength and provide a quick picture of a company's financial health and underlying value.