This chapter examines the role of financial literacyFinancial Literacy (FL) in shaping individuals’ financial behavior, market participation, and economic resilience. It reviews major theoretical models and measurement approaches, integrating international evidence that links FL with wealth accumulation, portfolio diversification, and retirement planning. Persistent gender and educational gaps are highlighted. The empirical section analyzes data from Italian households, showing how higher FL levels significantly increase participation in financial markets and the use of sophisticated instruments. Overall, the chapter frames FL as a key dimension of human capital and a strategic driver for financial inclusion, economic stability, and policy effectiveness.