Exploring Financial Literacy Challenges

Financial Literacy - Complete Controller

Financial literacy is combining financial knowledge with attitudes, skills, and behaviors, which are essential to make a financial decision based on personal circumstances. It helps improve your financial well-being. Undoubtedly, being financially literate will assist in influencing financial decisions. The ability to make financial decisions and improve financial well-being are two confusing aspects according to the definition of financial literacy.

Concepts defining financial literacy have failed to highlight the financial issues associated with the complex financial environment. According to financial literacy, anyone can be considered financially illiterate for not having enough skills or knowledge regarding finances. Researchers have anticipated that people who have low incomes carry the same behaviors, biases, weaknesses, and attitudes compared to those suffering from personal and stressful situations.

Being financially literate becomes difficult for people living in poverty to change their financial conditions. Financial assets may also affect people who earn less adversely as it falls into the ‘bank fee poverty trap.’ This trap is because they do not own any mortgages, or they have minimum bank balances to give up.

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Following certain cultures will enable individuals to become financially literate. Financial literacy does not determine how others are affected when an individual makes a financial decision, such as supporting a local store that will open opportunities for employment by creating ample benefits specifically for the community. Whereas shopping online is more likely to be a significant financial decision, but it will produce adverse effects on those who are running physical stores. It is essential to highlight the influences of financial decision making and how others are affected according to the definition of financial literacy. It includes cultural and personal values, socioeconomic status, life stages, professional associations, educational level, media, and much more.

Financial Dilemmas

Financial literacy is an individual’s capacity to gain more knowledge by reflecting on the critical consequences of financial decisions. These are “financial dilemmas,” which include stressful situations such as sudden expenses or unemployment. People with low income turn out to be the “best budgeters.” It is mainly due to the implementation of their practiced survival skills. For instance, if there is an option to either pay rent or feed the family, then an individual’s financial decision may be conflicted. It is not a “lack of financial literacy” that affects decisions. Instead, low-income families have a stronghold over their financial matters. It is necessary to expose financial limitations, as it will allow implementing concepts of financial literacy per the original context.ADP. Payroll – HR – Benefits


Another main issue related to financial literacy is that only 17 states are providing financial education. Schools must give essential life lessons about financial skills to youngsters. This education will help them to monetize labor and manage their assets efficiently. There is a definite need for programs comprised of financial literacy skills to be offered to students to learn how to manage and implement their finances appropriately.

Financial Literacy is a Collective Problem

Issues related to financial literacy are not associated with only one individual. It is a common problem for the whole nation as it directly affects the younger generation. Our country needs to plan on how to implement the concept of financial literacy in the best possible manner. Governments should allocate funds for proper training programs that will create awareness regarding financial management. It is necessary to impart financial literacy onto young adults as it will allow them to make better financial decisions and manage their finances more eloquently.Cubicle to Cloud virtual business

‘Increasing financial literacy isn’t just in the best interest of individuals; we all benefit from a more literate population.’ (Guest, 2017)

Addressing problems associated with financial literacy will help our nation grow in improving our citizens’ lifestyles. This improvement can only be possible if financial literacy gets integrated. Governments should consider ways to improve financial issues by initiating awareness seminars. These seminars will lead to a more educated and well-versed population in the disciplines of finance and financial management.


Financial literacy is a complex concept encompassing knowledge, skills, and behaviors for sound financial decision-making. The traditional understanding of financial literacy fails to account for the nuanced realities people face. It overlooks the influence of culture, personal values, socioeconomic status, and life stages on financial decisions. Moreover, a lack of educational programs on financial literacy in schools further perpetuates the issue. Addressing this collective problem requires a holistic approach, integrating financial education into young adults’ learning and raising awareness through government-funded initiatives. Ultimately, enhancing financial literacy benefits individuals and society, contributing to better financial decision-making and improved economic well-being.

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