What is Financial Literacy and Why is it so Important?

Financial literacy is your ability to understand and manage money confidently—things like budgeting, saving, debt, credit, and day-to-day spending decisions.

It’s important because good money knowledge helps you:

• Avoid high interest debt and bad products

• Reach goals like a car, home, or travel sooner

• Feel less stressed when bills or surprises pop up

In short: the more you understand how money works, the more control you have over your life.

KOHO Essential Supports Financial Literacy

Tools matter. A clear, simple money setup makes it easier to put good habits into practice.

With KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can subscribe to Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

Key Parts of Financial Literacy

1. Budgeting and Cash Flow

Knowing:

• What’s coming in (paycheques, benefits, side hustles)

• What’s going out (rent, food, subscriptions, debt payments)

This helps you live within your means and still make progress on goals.

2. Saving and Emergency Funds

Financial literacy means understanding:

• Why you need an emergency fund

• How interest helps your savings grow

• Why saving “a little, consistently” beats “a lot, someday”

3. Credit and Debt

You should know:

• How credit cards, lines of credit, and loans work

• The difference between good debt (planned, manageable) and bad debt (high-interest, unplanned)

• How your credit score and report affect renting, car loans, and sometimes jobs

4. Planning for the Future

This includes:

• Setting short-term and long-term goals

• Understanding tradeoffs (spend now vs save/invest for later)

• Learning the basics of retirement savings and investing over time

You don’t need to be an expert investor—just understanding the basics already puts you ahead.