Which term is used to describe the ability to manage financial resources wisely and achieve financial goals?

Financial literacy encapsulates the knowledge and skills necessary to make informed and effective decisions regarding financial resources. This includes understanding concepts such as budgeting, saving, investing, and managing debt, which collectively contribute to achieving financial goals. Individuals who are financially literate can interpret financial information, evaluate their own financial situation, and develop plans that align with their personal goals and values. This broad understanding is essential for navigating various financial challenges and opportunities in daily life, thereby fostering better financial well-being.

While budgeting, investment strategy, and resource management are related aspects of financial literacy, they are components or methods that fall under the broader umbrella of financial literacy. Budgeting refers specifically to the process of creating a plan to spend one’s resources over a certain period, while investment strategies focus on the specific approaches taken to grow wealth through investments. Resource management is a more general term that can apply to various areas beyond just financial resources, encompassing time and human resources as well.