Financial literacy is the ability to understand and effectively apply various financial skills, including personal financial management, budgeting, real estate, tax planning and investing. This topic tends to scare most people . Taking a good look at your finances and understanding it may make you face some harsh realities. The first step is understanding. Once you have a better understanding , then you can start to do something about it. Financial literacy helps individuals become self-sufficient so that they can achieve and maintain financial stability. Given the current economic crisis and pandemic, it is no better time to improve financial literacy. Those who understand the subject should be able to answer several questions about purchases, such as whether an item is required, whether it is affordable, and whether it’s an asset or a liability. Financial literacy education should also include organizational skills, attention to detail, consumer rights, technology, and global economics because the state of the global economy. Many people have lost their jobs and have now become unemployed. Whatever your concept of money and understanding how it worked previously, it may not be bad to start to learn more . Understanding investment opportunities, market trends and how the economy works is incredibly important for building and growing your wealth.
The first and most important thing is to start developing a mentality to learn about finance. It is never too late to start. You can start learning about how a credit card works. Understand more about investment opportunities, social security, real estate investment, investment in the stock market. It is better to learn about one topic at a time and not overdo it. This can take time to develop and you have to be consistent in dedicating a fixed number of hours every day for learning about finance.
Being financially literate means having the knowledge and confidence to efficiently and effectively manage, save and invest money for you and your family. This can include everything from getting out of debt, budgeting, insurance, investments, real estate, college and retirement planning to and tax and estate planning.
We all have different levels of financial literacy. Maybe you have a 401(k) but aren’t sure how else to plan for retirement. Maybe you’re wondering whether you should use a windfall to pay off your mortgage or pad the college fund. Or, perhaps, thinking much about money beyond the day-to-day makes you want to bury your head in the sand!
As you may know, 10,000 Americans reach age 65 daily, and many are on track to run out of money long before the end of their lives. Many families are burdened with large amounts of student loans or other forms of debt. Read my guide to paying off student loan debt HERE . More than half of U.S. adults do not have or understand why they need an up-to-date financial, estate and gift plan to protect themselves and their families. Improving your financial literacy will enable you to have a better understanding of these different aspects on money management. This can only set you up to be more financially responsible and knowledgeable.
Managing personal finances today is more complicated and time-consuming, yet more important than ever. We are living longer, but saving proportionately less. We feel less secure in our jobs, homes and overall outlooks than previous generations did. Covid 19 came along and really threw a wrench in most people’s ability to understand their finances. Some thought they were on a great path to financial freedom, but they’ve now been a lot of changes with the economy. We watch helplessly as our money evaporates as a result of the exorbitant costs of housing, taxes, education, health care and life’s too many unexpected events. Many clients and prospects worry about the future. Or unfortunately, in many cases they simply try not to think about it.
Wherever you are on your financial journey, here are ten ways to increase your financial literacy and help put your money to work for you and your family:
- Subscribe to financial newsletters.
For free financial news in your inbox, try subscribing to financial newsletters from trusted sources. And if you’re not already a subscriber, you can subscribe to Athene’s Smart Strategies, designed to help you take your financial journey to the next level with expert advice on finances and lifestyle. Newsletters are a good way to start off and not be too overwhelmed by the subject matter. You will will often get them monthly or semi monthly. Kiplinger’s Personal Finance, The Speculative Investor, and Nate’s Notes are some other good ones.
- Listen to financial podcasts- The ability to listen to podcast may simplify a lot of the complicate finance jargon that is not always easily understandable. Often times, someone can explain it better than with you reading it on your own. Podcasts can be a great way to soak up financial news while you do housework, run errands or walk the dog. Some of the best podcast to listen to on the subject are: The David Ramsey Show, So Money, Function, and Planet Money.
- Learning about personal finance by reading personal finance books is important at just about every stage in life. Some great ones are ‘I will teach you to be rich’ by Ramit Sethi and ‘The Simple Path to wealth’ by JL Collins
- Use your favorite social media channels to follow financial experts on Twitter or LinkedIn, or maybe join a personal finance Facebook group. Facebook has many groups that you can join that may be very helpful. If your learning style is anything like mine, you may find it easier to learn from a group or people that may explain terms in a manner that you will best understand. Personal finance bloggers like myself also try to steer you in the right direction by trying to write on an array of topics to best educate you on the subject matter. There is a lot of information out there, so be careful when and where you get your information.
- Start keeping a budget. All of the financial guidance from experts won’t mean much if you don’t know where your money is going every month. Start tracking your spending and set up a budget to help keep it all straight. For those who have never budgeted or felt the need to, this may be a little intimidating. Once you get over the initial feeling of being uncomfortable, you may learn to embrace budgeting. You will be able to track your money, see where it goes and look for clever ways to save more of it.
- Talk to a financial professional. A financial professional can answer your financial questions, whether it is about the basic day-to-day money situations or more complex long-term scenarios. He or she can also assess your current situation, help you make a plan for all of your financial needs and help you stay on track going forward.
- You can use the resources that are made available on the internet by the government. There are a lot of resources that the government has made public for people. If you give your time daily to study the reports and make analysis that surely your knowledge of finance will improve with time. Some useful government resources are
- The Alliance for Investor Education is a non-profit organization of 18 associations, government agencies, and self-regulatory bodies that are leaders in investor education/financial literacy.
- Money Smart, sponsored by the FDIC, is a financial education curriculum designed to help individuals outside the financial mainstream enhance their financial skills and create positive banking relationships.
- Neighbor Works Financial Capability Program. This program helps individuals and families develop sound personal financial management skills.
- If you are serious about learning finance you can take a course on it. You can take a course by joining an institute and taking regular classes. It can be done online too as now there are many courses available on the topic of finance on the internet. All you need to do is focus and pay attention to what you are learning. It is very important to have proper financial literacy at this modern age.
- You can learn from the media like TV, news, newspaper and even the radio. There are a lot of channels that only give news. You can watch the finance-related news to increase your knowledge. There are special segments in the newspaper that are related to financial growth and data related to finance. You can read magazines where the finance of big companies are discussed. Even on the radio, there are talk shows where people talk about finance. There are so many resources available for you if you want to learn about finance.
- You can start learning from the internet. There is so much content available on the topic of finance that you will never run out of resources. There are so many articles on the internet written about finance. There are many Youtube channels that talk about finance and gives you knowledge about finance. It is important to be able to filter the useful resources from the ones that are not helpful to you. Generally, the best contents are at the top of the search engines. You can check the comments of people like you and read what they have to say about the contents to filter the good content from the bad.
It is very important to improve your financial literacy if you are living in this day and age. It is one of the most important needs in your life today and to know about finance is a must. There are many people that do earn a good deal of money but due to lack of financial knowledge, they do not know how to manage their money. Without any proper knowledge, the investments that they make may not be ones that will be lucrative. It is better to first make a plan of what you want from your life and set clear goals to achieve those goals. To do all these things first you need to improve your knowledge of finance and it is unfortunate that it doesn’t happen in a single day. It takes lots of time and hard work and knowledge to build financial literacy.