One essential direction: information literacy, information technology fluency

Times are changing and one aspect which has seen some major changes is the way in which we spend money. Earlier cash would be the only and most preferred method of transaction.

The introduction of credit cards and the Brit Method changed the scenario completely. In fact, the situation is so different that today most people do not prefer using cash for their financial transactions.

As the popularity and reach of the credit card grew, the power of the Internet helped to increase its usage further. Today credit cards are used for innumerable financial transactions both in the real and the virtual world.

In such times, it is easy to lose track of your spending habits and you could end up accumulating debt. This has a direct effect on your savings and your future financial planning needs.Therefore, financial literacy is very important.

What does beingfinancially literate mean?

Being financially literate means being equipped with all the necessary knowledge to make the most correct and responsible financial decisions. You must be fully aware of factors such as the working of your bank account, how a credit card works, avoiding debt etc. They can directly affect your home budget, the education of your children and your life after retirement too.

Though it can seem that consumers who have low incomes might be less financially literate, this is not the case. People with high incomes can be equally unaware about financial issues and its effects.

Reasons why you should be financially literate

Financial knowledge is a great investment:

If you think that learning about finances is a complex task, you are not entirely wrong. However, there are various resources today that can make this process easy to understand.

It is a skill which can be learnt and there is no better time to start than right now. It does require some amount of persistence and patience but the rewards you will get in the form of your own financial freedom will be surely more than worth it.

Better financial decisions:

You will come across plenty of financial experts and advisors who will claim to give you the best financial advice. It is also possible that you will end up with advice that is conflicting and confusing. Some of this advice could also be the result of only half the truth.

The best way to avoid the above situations is to have a basic knowledge of financial education to help you make the most suitable choice as per your needs.

For retirement planning:

Getting yourself educated about finances can ensure that you have adequate resources during the period in your life of no income: your retired life.

The pension plans that previous generations enjoyed are rare in today’s times. Financial decisions and contributing to them is the responsibility of employees today. Hence it becomes even more necessary to have the correct knowledge to make the right decisions for your future planning.

Multiple financial options:

Getting financially educated can seem overwhelming due to the number of choices consumers have in terms of investment options and products. There are various options in credit cards, interest rates, mortgages etc. which make the process more complicated.

In addition to this, there are different companies such as banks, credit card companies, insurance firms, financial planners etc. All of them are vying for your attention to address your financial needs. A consumer with inadequate financial knowledge is bound to get confused by all these options.

It is never too late to start on the process of educating yourself. It gives you unmatched financial independence and the confidence to face all the challenges that may come your way.Being financially literate is an asset that is yours to own and yours to keep.

Bundy, A (2004) One essential direction: information literacy, information technology fluency. JeLit 1(1).

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The 2001 Australian Information literacy standards state that information technology (IT) literacy or fluency requires more intellectual abilities than the software and hardware knowledge associated with computer literacy, but that the focus is still on the technology. Information literacy (IL), however, is an intellectual framework developed since the mid 1970s for recognising the need for, understanding of, finding, evaluating and using information. This may be supported in part by IT or eLiteracy, in part by sound investigative methods, but most significantly through critical discernment and reasoning. Eliteracy, however it is defined, should therefore be contextualised within the IL framework, not apart from it. Revision of a paper presented at eLit 2003: second international conference on information and IT literacy held at Glasgow Caledonian University 11-13 June 2003.