Financial literacy refers to having an understanding of various aspects related to personal finance, such as managing money, budgeting, saving and investing. It involves being able to make informed decisions about financial matters, including planning for future expenses like retirement or college tuition, avoiding debt, building wealth, and making wise choices with one's income. Financial literacy also encompasses understanding the basic principles of finance such as compound interest, risk vs reward, diversification, and inflation. In essence, financial literacy is about having the knowledge and skills to make sound financial decisions that can help improve one’s overall well-being and quality of life.