The Effect of Financial Literacy on Cost Control in Small and Medium Enterprises (SMEs)

Abstract

This study examines the influence of financial literacy on cost control in Small and Medium Enterprises through a literature review approach. Financial literacy is identified as a key factor in effective financial management, particularly in cost planning and supervision. By analyzing scientific articles published over the past five years, this study explores the relationship between financial literacy and operational cost efficiency in Small and Medium Enterprises. The findings reveal that Small and Medium Enterprises with higher levels of financial literacy tend to maintain more organized financial records, develop realistic budgets, and implement stricter cost control measures. Furthermore, financial literacy promotes the adoption of digital financial technologies, enhances financial discipline, and supports data-driven decision-making. The study highlights the crucial role of financial literacy in strengthening Small and Medium performance, improving resource efficiency, and achieving sustainable business growth. It also suggests that financial literacy should be integrated into Small and Medium Enterprises development programs to enhance competitiveness and long-term financial stability.