Financial literacy is the process of being aware of your spending, this is important because financial literacy is the key yo being successful in the feature. Have you ever seen a successful rich man or woman unable to understand their spending? No, so being aware of your spending is very important.
Humans spend their money on either a want, or a need. These are two different things. However they are very close in meaning; a want is something you desire to have such as a car or a gym membership. A need is something you must have in order to survive as a human, this is like food and water. for example, if one buys food such as fruits and vegetables it is a need, but a need may slowly drift into a want if you are willing to buy to buy it this is like ice-cream. so be aware of what you want vs what you need, they aren't the same.
Another spending example is something called goods and services. This is a way you could spend your needs and wants, for example a want good is something such as a football or a gaming microphone, a need good as we discussed is like food. Goods are something that you can physically touch and fell, a service on the other hand is a thing, a verb, a doing, by someone else to satisfy your needs and wants, this could be like getting a hair cut or sending your car to a mechanic.
Financial decision happens everyday. It is an event that you or your parents do. Financial decision is the process of looking at a good or a service and thinking to yourself "should I buy this?", thinking to yourself if it is even worth it. But before you decide anything that has to do with money you have to ask yourself "can I buy this" i.e do you even have enough money to buy this and if so is the amount left after your purchase good or bad. There are good and bad financial decision. Good financial decisions are using your money for something that would benefit you, such as investing. Bad financial decisions are using your money for something that has no benefits for your future, this is like gambling your money, there is a higher chance you lose your money than if you invested that money.
Financial literacy makes you aware of your money. Money can be split in many categories such as net-income, pre-tax, post-tax, equity, assets, etc. Basically your money isn't always just cash or bank credits sometimes you have more money in your bank than you are suppose to have. This is tax or as we like to call it in Australia GST. GST stands for goods and services tax, you pay GST every time you go shopping and buy an item you have to pay an extra 10% of your shopping. GST is then transferred to the shop owner, and then the shop owner send it to the ATO.
GST isn't only when you purchase a good, if you work you are required to pay tax (this is only if you make over $18500/year). Tax rates vary depending on how much you make, for example if you work as a senior software engineer at a big company, and you make $175,000 per year, you first pay you automatic tax in which in this bracket it is $29,467 then you pay 37 cents for every $ above $120,000, so subtracting $175,000 from $120,000 gives us $55,000 then we multiply $55,000 by 0.37, this will then give us the total of about $20000, after subtracting the automatic tax and the individual tax we will end up with approximately $125,342 tax free.
Therefore, financial literacy is important as it makes us aware if our spending, how much money we have, and if it is a good decision or bad, I personally think everyone should be financial literate as it will make life easier money wise, and hopefully escape the matrix and live with the 3 freedoms, financial freedom, time freedom, and location freedom.
Digging Deeper:
As a future software developer the benefits that this will give to the life of (pseudo) includes having a big salary this is useful because I can buy things that I couldn't or wouldn't buy if I worked at a low salary job.