Define the term "financial literacy."

Financial literacy encompasses a broad range of knowledge and skills that enable individuals to make informed decisions regarding their financial resources. It includes the understanding of fundamental financial concepts such as budgeting, saving, investing, and understanding credit, as well as the ability to apply these concepts in real-life situations.

The definition highlights the importance of not just having theoretical knowledge but also the capacity to implement that knowledge practically. For example, a financially literate person can assess their financial situation, create a budget, manage debt, invest wisely, and plan for retirement.

While the other options refer to specific aspects of managing finances, they do not capture the comprehensive nature of financial literacy. Thus, the understanding and use of financial skills best defines what it means to be financially literate.