Financial literacy helps you understand every aspect of your personal finances ranging from budgets, salaries, investments, future saving plans, and your daily spending. Hence, financial literacy is as important for your future as it is for present financial affairs. If you believe you are not yet financially literate, keep reading this article so that you are fully set to start your journey to a prosperous and economically literate future by the end.
What is Financial Literacy?
Financial literacy refers to the basic understanding of finances and the value of money. When you are financially literate, you can make smarter money choices and be independent in your monetary decisions. It is your ability to understand and apply financial management skills in your daily life tasks such as investments, debts and bills.
Financial literacy includes life skills such as:
- Comprehending financial principles
- Debt management
- Investment and saving techniques
- Interest calculations
- Real estate planning
- College fees
- Tax management
- Concept and Importance of money as time
- Basics of loans
- Credit cards and credit score
- Stock market and cryptocurrency
Cryptocurrency, as stated by the experts, is a tool for investment and a mode of payment. Hence, a financially knowledgeable person should have the basic know-how of cryptocurrency and how the cryptocurrency market works. Users can easily buy Ethereum and other cryptocurrencies to use as a payment gateway.
Why is Financial Literacy Important?
Once you start knowing about finances, handling your money effectively, and you are able to make informed decisions about your financial issues, your life becomes much easier.
Following are some of the main benefits that come with financial literacy:
- Developing more responsible and healthy spending habits
- Understanding the importance of investments and saving accounts.
- Being able to talk about money more efficiently
- Making wiser financial choices
- Knowing how to manage personal finances
How to Achieve Financial Literacy?
Financial literacy is not something that is often taught at school (though there seems to be a big need for it as some trends show that financial literacy is declining). Two-thirds of American adults can’t even pass a basic financial literacy test; alarming, isn’t it?
We already are on different levels of our financial journey; maybe you have an investment portfolio but don’t know how to manage it, perhaps you are near your retirement and totally clueless about the future monetary strategies, maybe you are dealing with a loan and need assistance, or you are worried about saving for rainy days that come unannounced.
No matter wherever you are on your financial journey, you can always improve for the better.
Here are a few ways to not only increase your financial knowledge but ways to put it to work for a better future.
Make Use of Financial Money Management Apps and Tools:
Thanks to the internet and tech revolutions, managing your finances is far from boring now. There are hundreds of unique and engaging finance apps and money tools you can use for free. In addition to organizing and visualizing your financial life, such tools provide opportunities to learn and discover the world of finance.
These are a few money management apps and tools you can use:
- Personal Capital
- You Need A Budget (YNAB)
A beginner can easily use these apps, connect to a bank and learn the true art of financing.
Enjoy and Learn by Listening to a Podcast:
Podcasts are the easiest way to learn. Tune in to a podcast while driving, jogging, doing chores, and while working. Podcasts are great. The length of these podcasts varies from 10 minutes to even an hour. You will learn personal financial advice from experts, plus they will not bore you.
Here are a few favorites for beginners:
- So Money by Farnoosh Torabi
- Best for Women: The Fairer Cents
- Best for Seasoned Investors: The Disciplined Investor
These podcasts will enlighten your knowledge and won’t be a task to handle.
The More you Read, the Better:
Reading personal financial literacy books will help you even when you have no background in investing and financing. These books are the crucial first step towards a better and literate future. If you cannot read much, dedicate 1-2 hours per week to this practice. Some of the best beginner finance books are:
- I Will Teach you to Be Rich by Ramit Sethi
- The Millionaire Next Door by Thomas Stanley
- Rich Dad, Poor Dad by Robert T. Kiyosaki
The books are extremely beginner-friendly and will open your eyes to how to look at money, value it and all important aspects of financing such as budgeting, investing and financial planning. Different books for teens and adults are available to give a better perspective for both adults and teens. Financial literacy courses are also available for students and adults.
Financial Magazines and Online Publishers:
With so much information on the internet online, you should seek authentic ways to oil your financial literacy. Online publications and magazines should be selected carefully as there is so much false information on the internet.
Consider Kiplinger, Financial Times, and Fortune, as well as a slew of personal finance blogs. Websites such as Bankrate, Student Loan Hero, BiggerPockets, GoBankingRates, and Investopedia all contain a wealth of information, calculators, and other tools.