Suppose you have two loans. The first is a loan of AED 40,000 with an interest rate of 6%, and the second is a credit-card balance of AED 12,000 with an interest rate of 11% per cent. Which one would you plan to pay back first?
If your answer is loan of AED 40,000 - you fall in that category of debtors who make the mistake of not paying off their highest interest-bearing liabilities first! This also means that you have limited financial knowledge.
Financial literacy is the education and understanding of various financial areas. This topic focuses on the ability to manage personal finance matters in an efficient manner, and it includes the knowledge of making appropriate decisions about personal finance such as investing, insurance, real estate, paying for college, budgeting, retirement and tax planning.
Before you dive into the details of the vast topics - check out the 5 fundamentals of financial literacy that can get you started!