What are the potential consequences of poor financial literacy?

The potential consequences of poor financial literacy include higher debt and financial instability. When individuals lack a solid understanding of financial concepts such as budgeting, saving, investing, and credit management, they may struggle to make informed decisions about their money. This can lead to overspending, accumulating debt through high-interest loans or credit cards, and failing to save adequately for emergencies or retirement.

Additionally, without the skills to budget effectively, individuals may not be able to track their income and expenses, which can create financial chaos. This can result in an inability to meet financial obligations, leading to missed payments, late fees, and a downward spiral into further debt. The overall lack of financial knowledge creates a precarious situation, increasing the likelihood of bankruptcy or the need for financial assistance services. In contrast, financial literacy equips individuals with the necessary tools to manage their finances, make strategic decisions, and secure their financial future.