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Investment special: What is financial literacy?

The banking crisis exposed our weak grasp of the basics of finance. We should all go back to the classroom

By Alistair Darling   179

Listen: Alistair Darling discusses financial literacy with Prospect’s editor, Bronwen Maddox

[audio: http://www.prospectmagazine.co.uk/Podcast_Financial_Literacy.mp3]

At a basic level, financial literacy is people’s capacity to understand the consequences of what they do when they open a bank account or enter into a credit card agreement—and the rights and responsibilities that go along with these.

Understanding the implications of having a bank account and borrowing from a bank are the most important areas of financial literacy, followed by pensions and buying a house. At its most fundamental, financial literacy involves grasping the notion that money can be borrowed only at a cost.

At…

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