Financial education is a phrase that is used when referring to the knowledge and skills acquired to make informed decisions in regard to the use and management of money. On the other hand, financial literacy is a phrase used to refer to the ability to understand and put into practice financial concepts in everyday life e.g. career planning, budgeting, investing and saving. The two terms are related since financial literacy entails the practical application of financial education.
Financial education is more about having the knowledge to understand how financial instruments work. It refers to the awareness of financial concepts basically through studying. Additionally, financial education is grounded on formal instruction, for instance through educational courses, seminars and workshops that cover subjects such as saving, debt management, investing, retirement planning, and budgeting.
On the other hand, financial literacy dwells more on what and how a person can transform their financial skills and knowledge into practical scenarios in their lives or occupations.
According to the Organization for Economic Co-operation and Development (OECD), financial literacy is more of the skills that one applies after acquiring financial education. It also relates to the motivation and confidence that an individual has to apply the knowledge garnered towards making financial decisions.
Key Differences between Financial Education and Financial Literacy
|
Aspect |
Financial Education |
Financial Literacy |
|
Focus |
Knowledge acquisition and learning |
Application of knowledge in real-life situations |
|
Scope |
Covers a broad range of financial topics and concepts |
Involves practical skills and behaviors in finance |
|
Objective |
Educating and informing |
To empower individuals to make better financial decisions |
|
Outcome |
Better comprehension of financial concepts |
Better financial decision-making |
|
Approach |
Often delivered through structured programs or courses especially in educational institutions |
Revealed in everyday financial activities that a person engages in |
|
Measurement |
Examined through assessments or educational attainment i.e. diploma or degree |
Can be measured by the ability to manage financial resources effectively |
The primary goal of Fineducke is fostering individuals to get the required knowledge and skills to be in a position of navigating the contemporary complex world of finance and make sound financial decisions.
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