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Financial literacy refers to the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. It encompasses a range of topics, including budgeting, saving, investing, debt management, and understanding financial products. Individuals with high financial literacy are better equipped to manage their money, plan for the future, and avoid financial pitfalls.

The importance of financial literacy is widely recognized as it empowers individuals to navigate the complexities of the modern financial landscape. It plays a crucial role in personal well-being, contributing to reduced stress, increased financial security, and the ability to achieve long-term goals such as homeownership or retirement. Furthermore, a financially literate population can lead to a more stable and robust economy, as individuals are more likely to make sound financial choices that benefit themselves and society.

Financial literacy can be developed through various means, including formal education, workshops, online resources, and personal experience. Many educational institutions and non-profit organizations offer programs and materials designed to improve financial knowledge and skills across different age groups and socioeconomic backgrounds. Continuous learning and adaptation are key, as financial markets and products evolve over time.