Financial literacy refers to the possession of knowledge and understanding of basic financial matters. It entails the knowledge required for making sound decisions pertaining to financial products, such as investments, insurance, savings, real estate, tax planning, and retirement, that affect financial well-being... Specifically, all consumers should have a basic understanding of financial concepts and key financial products, be comfortable discussing money and financial issues, and be able to make sound financial choices about saving, spending, and managing debt, and respond competently to the changes that affect their everyday financial well-being.
Source: Roy, A. (2015). Financial literacy. In F. F. Wherry & J. Schor (Eds.), The SAGE Encyclopedia of Economics and Society (Vol. 2, pp. 690-692). SAGE Reference.