Say that I am financially illiterate. How do I fix this?
I'm not trying to be sarcastic, just to point out the strangeness of it all. Most people wouldn't turn the ignition key and start trying to drive a car without taking some instructon first, but they are happy to whip out that credit card whenever the chance allows them.
A rephrasing of this question: what level of financial literacy can a person reasonably expect to attain by just applying "common sense", and what is the baseline level of financial literacy that we should strive for?
What I wanted to say was that to learn about managing your finances you need to take an active role in learning how things work - whether by reading books, going on a course, whatever.
As a base level of financial literacy I don't think people need that much to make a big difference in their lives. Teach people budgeting, how to track their spending, and a basic understanding of savings and credit interest rates/compound growth etc.
Teaching people to live within their means and use credit for "needs" instead of "wants" will be one of the hardest lessons to impart. I don't know how you'd accomplish that.