The importance of financial literacy for the community of Arjosari Village, Kedungwaru II Hamlet

Abstract

Financial literacy is an important factor in improving community welfare, especially in rural areas. Arjosari Village, Kedungwaru II Hamlet, as one of the developing villages, faces various challenges in financial management, such as low understanding of investment, savings, and debt management. This research aims to analyze the importance of financial literacy for village communities in improving economic welfare and provide solutions to enhance their financial understanding. The method used includes literature study and interviews with local communities. The research findings show that low financial literacy makes people more vulnerable to financial risks, such as falling into debt from loan sharks and lacking savings for the future. While people have indirectly applied financial principles in their daily lives, many do not understand fundamental concepts such as budgeting and the importance of having an emergency fund. Factors such as attitudes towards finance, income levels, peer influence, and the role of financial technology (fintech) significantly impact people's financial behavior. Increasing financial literacy can positively affect economic welfare by encouraging better financial management, increasing income, and improving access to health services, education, and housing. Therefore, implementing sustainable financial education programs, community-based training, and providing easy access to formal financial services are crucial for enhancing the financial independence and welfare of Arjosari Village's community.