If Tennessee residents were to take a quiz about financial literacy, some would score high while others might be at the lower end of the spectrum. In this state and others, there are many people who do not even understand what is meant by the term “financial literacy.” It is a good idea to learn more about it because lack of knowledge can exacerbate financial problems, especially if one is in need of debt relief and considering filing for bankruptcy.
What is financial literacy?
This term typically refers to knowledge regarding finances, credit and debt. If a person is financially literate, he or she is able to manage finances and make informed and responsible decisions regarding day-to-day financial matters in his or her life. On the other hand, having little to no knowledge about finances, credit or debt can present significant challenges when it comes time to create a budget, apply for a loan or resolve an unexpected financial crisis.
Modern finances are much more complex
Nowadays, issues such as retirement benefits, investments and savings options, and other finance-related matters can be difficult to understand if one is not financially literate. Social Security is another concern that complicates modern finances. Long ago, Social Security benefits were the primary means of income after retirement. Today, the program is at risk for extinction. It is important to research such issues to improve one’s financial literacy.
If a serious financial crisis arises
Even a highly financially literate person can encounter serious financial distress at some point, especially if unexpected issues arise, such as loss of income or a medical crisis. In such cases, it pays to know a lot about the various types of bankruptcy, which can be used as valuable financial tools to help restore financial stability when a crisis has occurred.