The 6 Components of Financial Literacy & Why They Matter

The 6 Components of Financial Literacy & Why They Matter

By Edris Tucker, AFC® Financial Coach for CommunityWorks

Literacy is the capacity to communicate effectively, to be able to hear and understand, to use language and its symbols to make sense. Financial literacy is similar, involving the language of finance so that a person can competently function independently in society. The six major components of financial literacy include the ability to: 

  1. Earn 
  2. Spend 
  3. Save
  4. Borrow 
  5. Protect 
  6. Invest 

It is more than just knowledge, it is about the ability to skillfully converse with others, financially. The most important thing you need to communicate is Trust.  

When you borrow, can your lender trust you will repay? Do you know that the terms are fair and equitable, or are you just hoping your signature won’t get you into trouble? 

When you work, can your employer trust that the job will be done correctly? When you earn, can you trust your employer to pay you for your labors, as agreed? 

When you buy, can you trust that the vendor has provided the functionality promised? 

Will your savings be safe? 

Will your identity and reputation remain undamaged by the action of others? 

Will your obligations be fulfilled, even when you lack the capacity to work, because of illness, disability, or death? 

We are all connected. When one person is unable to pay his or her bills, the entire community suffers as well. The ripples of both success and failure reach far and wide. 

It is your civic duty, your familial duty, your personal responsibility, to be competent in your abilities to speak trust, upon which our monetary system relies. 

CommunityWorks and the CW Women’s Business Center are offering a new series, “Financial Capability: Connecting Your Personal Finances to Your Business Success” on May 12, 19, 26 and June 2nd. This 4 week course will be virtual on Thursdays between 6:00-7:30pm. By the end of this course, you will have a better understanding the mindset and mechanics of preparing your personal finances for business success.

You can pick and choose the classes to attend or come to the whole series. will be extending the opportunity for you to create greater trust as an entrepreneur so that you, and everyone else, by extension, can be more successful. Sign up here! 

And help us help you speak money more fluently. 

Edris Tucker, Financial Coaching Program Manager