Question

Please provide at least 5 sources that explain the effects of financial literacy in young adults.

Answer 1

Effects of financial literacy in young adults can be understodd from the following:

1. Increased Savings

Due to financial literacy adults are able to foresee their future financial requirements and plan accordingly at early stage of life. If they are not aware of their future requirements there will be tendency of spending majority of their income without saving it.

2. Ability to take decision on Investments

WIth financial literacy, one is better equipped with the ability to analyze various investments. Such a person need not solely depend on investment advisors for their inevstments. They can consult an advisor and understsnd the latest options availaible unlike a person who is not able to grasp such things.

3. Increased quality of life

Persons who are financially literate are able to achieve a better quality of life as they do not end up making bad financial decisions. Financial literacy keeps a check on their spending habits.

4. Increased Negotiation Power

With financial literarcy comes increased negotiating power. Such persons are able to negotiate well for anything they purchase be it consumable goods, insurance, etc. They know how much value they will be deriving out of such purchased products and hence they also know how much maximum they can pay for it.

5. Opens up additional source of income

People who are financially literate can participate in stock markets to do stock trading, derivatives trading on their own. Otherwise people have to solely depend on Fixed Deposits or Mutual Funds.