What is Financial Capability?

The word “financial” describes anything that has to do with or relates to money. Financial capability is the knowledge, attitude, and competence needed to make and handle money.

Financial capability is not merely being able to meet your needs. It entails the art of management, spending, and development. One must be competent in some areas to attain financial capability.

How to Be Financially Capable

Picture of Financial Capability

Some factors need to be in place for you to attain financial capability. Some of them include:

1. Management

You have to be able to manage financial resources well to be financially capable. It is not about being stingy. You need to develop saving skills. You should be able to track your money, both credit, and debit.

You don’t have to read an accounting textbook to know how to calculate your income and expenses. Just the basics and you’re fine. You have two columns where you record the money you earn and the one you spend.

You can have a bank account to save your money. A bank account keeps your money safe. An alternative is to have an envelope or safe box where you put in little amounts. When accumulated, you can use the funds for the purpose for which you saved it or invest it.

An essential area where management is vital is in spending. Impulse buying is not a beneficial decision when it comes to financial management. It makes you spend unnecessarily and waste resources where you should be saving them.

After learning about management, you have to put it into practice. If you haven’t practiced what you’ve learned, you have as good as not learned anything.

2. Decision

Making the right decision will propel you towards financial capability. Knowing what actions to take to grow your money is essential. It will help if you make smart money choices.

Identifying investment opportunities and using them is the right decision. Financial decisions differ with each person. Their challenges and environment inform their monetary choices. Since these things are unique to people, their decisions will be different.

3. Attitude

You cannot be financially capable if you don’t have the right attitude towards money. Perhaps you see saving as an unnecessary exercise. You believe you can keep the money without spending it.

But over time, you’ll come to realize that you spend it anyway. The right attitude would be to get the money out of sight practically. Save it in a bank or safe.

Self-assurance is a positive attitude that is necessary for financial capability. Believing that you can meet your target or reach a goal is essential. Self-assurance will drive positive decisions and actions.

4. Location

Your location will determine your financial capability. People in enabling environments are more financially capable than others who are not. The sociopolitical and economic situation you are in matters.

A location where there are economic growth and sociopolitical stability is essential to being financially capable. You can only use opportunities where they are available.


You need to acquire ample knowledge of money-making, management, and spending to be financially capable. It would help if you are in the right environment and have a positive attitude towards money.