Financial literacy means being savvy with your cash flows and understanding your financial transactions in order to make better decisions that will protect and increase your wealth. Many feel that financial literacy is no longer useful or relevant in the face of our current economic meltdown. They feel that, no matter what consumers know or do, they will be hurt in this recession.

However, financial literacy is more important than ever. Understanding your financial position and how to navigate through tough economic times will give you a leg up in ensuring your financial security.

The people who will survive and thrive in today’s economy are those who have a handle on their personal finances. They know what they own and what they owe and they know where the cash is coming from and going. Every dollar that comes in has a name- meaning they know exactly where it is going.

How can you improve your financial literacy? Set aside some time every day or every week to better understand your financial situation. Become familiar with the terms of your credit obligations. Know what you’re paying in interest every month. Know when your obligations will be paid off. Know how much you’re setting aside as a rainy day fund and calculate how long that amount of money will keep you afloat.

Once you know that state of your financial affairs, it’s time to make it better. Shop your credit around and make sure that you are getting the best interest rate possible. Ask your current lenders to lower their rates. It might not work but it does sometimes and you’ll be better off for it.

* Financial literacy is crucial to surviving tough economic times like we are seeing right now. Getting a handle on your money will ensure that you end up with more of it.