Abstract
Although financial education consists of individuals of all ages, education of young people in the field of finance is more important. The young generation faces more financial risks and more complicated financial products than their parents. Besides, young people are introduced to financial services at very early ages owing to cell phones, bank accounts, credit cards. Therefore, it is important that individuals are educated in finance as early as possible.
Top1. Financial Literacy
Vitt et al. (2000) defined financial literacy as; the ability to read, analyze, manage, and communicate about the personal financial conditions that affect material well-being. It includes the ability to discern financial choices, discuss money and financial issues without (or despite) discomfort, plan for the future, and respond competently to life events that affect everyday financial decisions, including events in the general economy. Mason & Wilson (2000) defined it as an individual’s ability to obtain, understand and evaluate the relevant information necessary to make decisions with an awareness of the likely financial consequences. Hogarth (2002) defined financial literacy as 1) knowledgeable, educated and informed on the issues of managing money and assets; 2) understand the basic concepts underlying the management of money and assets; and 3) use that knowledge and understanding to plan and implement their financial decisions.
Key Terms in this Chapter
Financial Well-Being: Is the capability to develop decision making ability to have the financial means for the best conditions for saving, investing, using credits and planning for the future. It gives comfortably to the ones (ie, person, family, community) to enjoy a gratifying lifestyle.
Financial Behavior: Is the capability to capture of understanding overall impacts of financial decisions on one’s (ie. person, family, community, country) circumstances and to make the right decisions related to the cash managment, precautions and opportunities for budget planning.
Financial Knowledge: Is the capability how to manage the money in different usage, including the monitoring of day to day financial matters in the market and make the right choices for “financial literate” people’s needs.
Financial Education: Is the process for the consumers and investors (ie person, family, community) to be developed, informed and taught about financial products and concepts through the financial risks and opportunities. This education aims to help them to be aware and informed about choices that they make and help them to improve their confidence and ability to develop processes for the financial topics.
Financial Skills: Is the capability to use relevant knowledge and understanding to manage an expected or an unpredictable situation in order to solve a financial problem and convert it to a benefit and opportunity to one’s advantage. These skills can be acquired or can be learned through a financial education backround.
Financial Socialization: Is the capability to obtain all relevant technical, commercial, behavioral and emotional information that contribute to one’s financial knowledge and skills. The source of financial socialization in the most of the cases is the surrounding social environment, such as family members, parents, relatives, close friends, community organizations and professional financial bodies.
Financial Literacy: Is the information for financial consumers (ie person, family, community) increase their awarness about the risks and opportunities within financial products and concepts in order to increase their level of welfare respectively.