The Impact of Financial Literacy on Personal Financial Decision-Making

Abstract

Financial literacy has become an important factor in determining how individuals manage their personal finances. The ability to understand financial concepts such as budgeting, saving, investing, and debt management allows individuals to make better financial decisions. This study aims to examine the impact of financial literacy on personal financial decision-making. The research uses a qualitative descriptive approach through a literature review of previous studies related to financial literacy and financial behavior. The findings indicate that individuals with higher levels of financial literacy tend to make more effective financial decisions, including better budgeting practices, responsible credit use, and long-term financial planning. Financial literacy also helps individuals avoid financial risks and manage financial resources more efficiently. Therefore, improving financial literacy through education and awareness programs is essential to support better financial decision-making and long-term financial well-being.