What does 'financial literacy' encompass?

Financial literacy encompasses a broad range of skills and knowledge that allow individuals to make informed and effective decisions regarding their financial resources. It includes the understanding of various financial concepts such as budgeting, saving, investing, and debt management, which empower individuals to navigate their financial lives successfully.

By recognizing that financial literacy involves a comprehensive set of skills, answer B accurately captures the essence of financial literacy. This term goes beyond just saving money effectively or being proficient in investment strategies; it also includes understanding how to manage daily expenses, how to use credit wisely, and the ability to read and comprehend financial statements.

While expertise in investment strategies and understanding complex loan agreements are components of financial literacy, they represent a more specialized aspect. Financial literacy as a whole is about having a grasp over a variety of financial tools and concepts that one might encounter in daily life, making answer B the most encompassing and accurate description of financial literacy.