“Education is the best investment,” said Benjamin Franklin. These words are especially relevant today, when our life achievements depend to a very large extent on education—not only the education we receive at school and university, but also on lifelong learning.

Successfully navigating the modern world requires us to possess both professional knowledge and skills that allow us to earn a living, as well as a number of other competencies without which the contemporary individual is “lost.” Financial literacy is among these essential competencies.

Why Is It So Important to Be Financially Literate?

There are many reasons, but here we highlight the four most important ones:

Transfer of Responsibility, or “Your Well-Being Is Your Personal Responsibility”

“The state (should) take care of us—our health, our pensions, our well-being?” This sounds good, but it is far from reality. If you share this belief, it is worth reconsidering.

The state is all of us. In Bulgaria, the demographic situation is difficult—the population is aging at an alarming rate. This means that fewer and fewer working people are bearing the burden of supporting a growing economically inactive population. To the demographic factor we can add others: high unemployment, low wages (and therefore low social security contributions), a significant share of the grey economy, emigration, and more.

This situation leads to a logical outcome: the state is able to provide only a minimum level of financial security for citizens. As a result, individuals increasingly have to take responsibility for their own financial well-being.

In other words, do not rely on a “state” pension to ensure a comfortable retirement. You will need to take care of that yourself by starting to save and invest as early as possible in your career—and you need to be financially literate enough to know how to do it.

“Turbulent” Times – Uncertain Income

The days when it was common to retire from the same place where you worked your entire life are long gone. Prepare for lifelong uncertainty—and that means uncertain income.

How can you cope? First and foremost, never stop upgrading your qualifications and learning—this will make it easier to find a job even during periods of economic slowdown. Equally important is financial preparedness: build and maintain an emergency fund that can cover your living expenses for at least six months.

Diversity and Complexity of Financial Products, or “Do I Know What I’m Using?”

Do you find it difficult to navigate the wide variety of financial products and services? You are not alone.

To choose the right financial product, you need to understand its nature, its potential benefits, and its inherent risks. In other words, you need to be financially literate enough to ask the right questions and correctly understand the answers.

A lack of financial knowledge and skills can lead to poor choices or to avoiding certain products or services altogether. In the best case, this means missing out on favorable opportunities; in the worst case, it can lead to financial instability.

“Our Dreams Are Expensive”

Each of us has life goals—to build a home, provide a good education for our children, secure our old age, and more. What they all have in common is that they require significant financial resources.

Unless you have a millionaire uncle or win the lottery, you will need to set aside money over a long period and manage it wisely so that, over time, you accumulate enough to achieve your goals.

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