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Unleash Your Money Power: The Ultimate Guide to Financial Literacy

Many unforeseeable possibilities can affect our lives, which is valid for our economic situation.


6 min read

Last Updated: Mar 29, 2024

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Table of contents

What Are the Fundamental Elements of Financial Literacy?

What Are the Key Concepts of Financial Literacy?

How to Improve Financial Literacy?

What Is the Importance of Financial Literacy, and What Are Its Benefits?

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Nobody can have the chance to know precisely where the world economy is heading or whether policymakers will encourage growth or contraction next year. We also don't control inflation rates or exchange levels. Yet, all these factors impact our economic well-being. Financial literacy is the comprehensive knowledge we need to navigate through all the unknown or unpredictable economic choices to chart our financial journey.

When asked what financial literacy is, we can provide a standard definition: "Financial literacy is the ability to understand financial matters such as budgeting, saving, investing, simple and compound interest, inflation, and to apply this knowledge in managing one's finances." To understand this definition better, let's break it down into finance and literacy.

The Merriam-Webster Dictionary defines finance as "The system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities." In a broader sense, finance is managing and evaluating money. Whether it's public, corporate, or personal finance, at its core, it's a crucial tool for meeting infinite needs with limited resources.

Let's move on to literacy. UNESCO defines literacy as "the ability to identify, understand, interpret, create, communicate, and compute using printed and written materials associated with varying contexts." In its simplest definition, financial literacy is understanding financial concepts and terms, interpreting them accurately, and making decisions aligned with objectives.


What Are the Fundamental Elements of Financial Literacy?

Financial Knowledge

To be financially literate, we must know basic financial concepts such as budgeting, insurance, saving, investing, credit, simple and compound interest, inflation, risk, return, maturity, assets, and debt.

  • Calculating simple and compound interest,
  • Knowing the relationship between risk and return,
  • Understanding how inflation affects purchasing power,
  • Knowing the benefits of diversifying risk,
  • Borrowing the right amount at the right time,

are some of the elements of financial knowledge.

Financial Attitude

We should use our earnings to spend and save; we must make this a habit and sustain it. The course, which focuses on financial education, attempts to provide participants with the abilities, know-how, and skills they need to handle their money more effectively.

  • Preferring long-term savings over short-term spending,
  • Making economic expenditures thinking about the future,
  • Knowing that money is for saving as well as spending,

are some of the elements of financial attitude.

Financial Behavior

One of the most critical elements of financial literacy emerges as financial behavior. Economic behavior is creating and tracking personal budgets, managing debts and credits, making risk assessments, and making short and long-term investment decisions.

  • Thinking before purchasing,
  • Paying off debts on time,
  • Budgeting,
  • Setting long-term financial goals and working towards these goals,
  • Borrowing in cases of insufficient income,

are some of the elements of financial behavior.


What Are the Key Concepts of Financial Literacy?

"There is no age limit for learning" is most applicable in financial literacy. The world and economy are constantly changing, and "smart money" uses knowledge and data that are continuously updated to increase earnings as it notices these changes first. Concepts that did not exist in anyone's life 50 years ago can become relevant to everyone's pocket today. Let's think about the last five years. Due to the pandemic, the world first entered a cycle of significant money abundance, followed by rising inflation and interest rates. Meanwhile, a brand-new technology emerged, potentially affecting all sectors significantly, becoming one of the main agenda items: Artificial Intelligence.

The dizzying pace of the economy and the financial world proves that financial literacy is not a static pile of information but a continuous learning, development, and adaptation process.Whether our goal is early retirement or buying the car or house we want, the sooner we improve our financial literacy, the further we will go.Some concepts we will often hear on this journey include:

  • Budget
  • Saving
  • Investing
  • Debt and Credit Management
  • Personal Finance Management


Developing healthy spending habits, planning expenses and income, and improving savings are crucial for a reasonable budget. A well-planned budget is one of the most essential tools for efficient investment and reaching well-being.


One of the most critical steps toward financial literacy is learning how to save money. How savings are made, which methods are ideal for whom, and areas like these should be meticulously examined to achieve both long and short-term goals.


Turning those savings into a good investment is equally important as saving for financial goals. We can grow our portfolio by investing in various areas, from the stock market to precious metals, from real estate to investment funds, and by evaluating major trend changes. Therefore, investment is one of the most critical concepts of financial literacy.

Debt Management

Like companies, individuals can also borrow to grow faster. However, there are many essential points to consider for this borrowing to be sustainable. Knowing how to borrow, using credits and credit cards correctly, improving credit scores, and learning these details to become financially literate provide significant advantages for financial freedom.

Personal Finance Management

Personal finance management includes all the concepts mentioned above. For an individual to achieve financial freedom, knowing "how money works" and understanding financial terms is crucial. However, more importantly, these steps must be well planned, goals set, risk-return analysis done correctly, and prepared for potential opportunities and crises. Good personal finance management is only possible with the development of financial literacy.


How to Improve Financial Literacy?

According to Standard & Poor's financial literacy survey (S&P Global FinLit Survey), only 24% of adults in Turkey are financially literate. Considering that this rate is much higher in developed countries, it becomes clear that there is an excellent need for efforts to improve financial literacy in our country. For free, it is possible to participate in various financial literacy courses offered by public institutions and organizations, NGOs, and international organizations. By participating in these financial literacy training sessions, we can take an essential step towards better personal finance.We have compiled some financial literacy training and content offered by official institutions and organizations:

Economy for Everyone Platform by CBRT

The Central Bank of the Republic of Turkey offers content suitable for all ages and knowledge levels with its Economy for Everyone platform. From the history of money to definitions of economic terms, many trainings and content are available on the site for free.

International Labour Organization

The online course the International Labour Organization (ILO) offers can also help improve your financial literacy.

United Nations Development Programme / I Can Manage My Money

Accessing many resources to improve financial literacy is very important. Since 2009, the United Nations Development Programme (UNDP) and Habitat Association have created a significant content pool with the 'I Can Manage My Money' project. To improve your financial knowledge, you can regularly visit the site, which contains many resources for different age groups, professions, and expertise levels.

Financial Literacy and Access Association

The Financial Literacy and Access Association is one of the NGOs that plays a vital role in the proliferation and development of financial literacy in Turkey. The association offers various financial literacy training on its portal, FinKURS.

Additionally, you can measure how financially literate you are by participating in the Financial Literacy Level Measurement Survey by the Banks Association of Turkey at this link. Moreover, this test offered in English by the Organisation for Economic Co-operation and Development (OECD) is another resource to see your level and learn what areas you need to improve.

What Is the Importance of Financial Literacy, and What Are Its Benefits?

Knowing how money works, making money from money, and setting rational predictions and goals are crucial for creating wealth and assets. As in the motto "Knowledge is the most valuable commodity of our era," earning money and financial literacy skills are critical for long-term well-being.

Whether at the start of your career or counting down to retirement, knowing how to use your money will always take you further. Moreover, it's necessary to take the proper steps at the right time to be minimally affected by potential crises and collapses, thanks to investment strategies.

Some of the advantages of financial literacy include:

  • Financial literacy protects you from making significant mistakes.
  • Financial literacy helps you be more prepared for emergencies such as unemployment and health issues.
  • Improving financial literacy is essential to gain various tools and skills you can use to achieve financial freedom and reach your goals.
  • With financial literacy, you can make more accurate forecasts for the future, borrow correctly, and snowball.

Sources: 1, 2, 3

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