Final answer:
Financial literacy is the ability to effectively manage financial resources for a lifetime of financial well-being. It includes budgeting, saving, investing, and using credit responsibly.
Step-by-step explanation:
The ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being is called financial literacy. Financial literacy is important in order to make informed decisions about budgeting, saving, investing, and using credit. It includes understanding how financial institutions work, knowing the types of loans available to consumers, and being able to maintain a checking account and reconcile a bank statement. Developing strategies to become a low-risk borrower and improving one's personal credit score are also part of financial literacy.