The Crucial Role of Economic and Financial Literacy in Everyday Life

SED Team
Jul 21
3 min read

Read Summary

Economic literacy helps people make smarter choices in daily life—from managing a budget to understanding broader financial systems. In Armenia, initiatives like SED with the Tatevatsi Economics Olympiad are equipping youth with essential skills to navigate real-world challenges. A financially informed society is key to both personal well-being and national progress.

Being savvy about money and the economy means knowing how financial products work, keeping up with economic trends, and understanding how policies affect things. For people, this kind of know-how can be the difference between being financially secure and facing tough times.

Economics plays a role in everything—from the price of bread in Yerevan to shifts in global energy markets. Yet many people still think of it as an abstract academic discipline, rather than a practical tool for understanding and navigating everyday life.

Economics in Everyday Life

In our daily routines—whether we're shopping for groceries, applying for a loan, planning a vacation, or voting in an election—we’re constantly making economic decisions. At its core, economics is all about figuring out how people manage limited resources to meet their wants and needs. This plays out in a variety of ways in our everyday lives:

Managing personal finances: Whether you're a student budgeting your stipend, a family planning monthly expenses, or an entrepreneur balancing costs and revenues, the same economic principles apply.
Budgeting and Spending: Understanding how to handle finances, prioritize expenditures, and save for the future are fundamental economic skills. These skills assist individuals in avoiding debt, preparing for emergencies, and reaching financial objectives.
Making Smart Choices: Every time we pick out products, check out prices, or decide if we should rent or buy a place, we're using economic thinking. Understanding opportunity costs—what we give up when we make a choice—can help us make better decisions.
Work and Wages: Economics helps us understand labor markets, wages, and job opportunities. It can explain why certain skills are in demand, why salaries vary, and how inflation affects purchasing power.

Being Economically Literate

Economic literacy provides individuals with a foundational understanding of how financial systems operate. With a solid grasp of economic principles, individuals are better equipped to make informed decisions regarding their financial futures and be prepared for potential economic challenges. It empowers individuals to:

Track spending and reduce unnecessary expenses
Build savings and emergency funds
Understand loans, credit, and interest rates
Make informed choices about education, investment, or business

At the community level, this can translate into more financially secure families and, by extension, a more stable society. When families achieve financial security, they are better equipped to meet their basic needs, such as housing, food, healthcare, and education.

Why Nations Prioritize Financial Literacy

Building a More Economically Literate Armenia

In Armenia’s economy, like many others, it faces both opportunities and vulnerabilities—from global inflation trends to local development initiatives. To navigate these effectively, citizens need to understand:

How the economy works at both the micro and macro levels
What inflation, interest rates, and exchange rates mean for their daily lives
The basics of taxes, state budgets, and public services
The importance of smart saving and responsible borrowing

When citizens understand the broader economic context, they’re more likely to support informed policies, hold institutions accountable, and contribute constructively to national growth. A population well-versed in economics and finance contributes to stability, growth, and innovation.

School for Economic Decisions (SED): A Catalyst for Change

As SED continues to promote youth engagement in economics, it’s clear that economic literacy is no longer a luxury—it’s a life skill. Even simple practices—like tracking monthly expenses in a spreadsheet or comparing product prices online—help build confidence and resilience.

Events like the Tatevatsi Economics Olympiad are doing important work to build economic awareness among Armenia’s youth. By encouraging analytical thinking, data interpretation, and real-world problem solving, the Olympiad is nurturing the next generation of informed citizens and leaders.

Final Thoughts

Economic and financial literacy is essential for everyone, influencing decisions like spending, saving, and future planning. Understanding money management empowers individuals to tackle challenges, seize opportunities, and contribute to their communities.

Financial literacy helps people make informed choices, avoid debt, and achieve long-term goals such as education, housing, or retirement. Nationally, informed citizens can comprehend policies, support reforms, and engage in shaping a stable economy.