Measuring Financial Literacy

The following article stresses on the importance of need to measure financial literacy in individuals and families. Measuring the level of financial education in public is important to identify the outcomes of their financial choices, and to estimate the possible difficulties they face in making productive and fruitful financial decisions. The article states that for the objective of making measure of financial knowledge in public, several researches have been conducted over the years using extensive categories of financial literacy measures. Questions relating to money basics, investments, borrowings, insurance, and risk management techniques were included in these researches. The researches were conducted by means of interviews and questionnaires. …show more content…
Some other factors like risky investments, extraordinary preferences, unthoughtful and emotional financial steps, behavioral biases, and some major global changes or change in economic factors can also make people suffer financial losses. The article demonstrates that there is a need to develop some standardized financial measures, because in the absence of these one cannot estimate his progress in financial literacy as well as improvement in his financial abilities caused by the financial education can also be not judged. Financial education being imparted to a person must enable him to make sensible and effective choices on borrowings, investments, personal finance, and financial security. It must make a person able to choose between complex financial products. The article also highlights the need to design efficient standards, the use of which can enable the researchers to know, when to associate poor financial decisions to lack of financial