Financial literacy teaches you how to spend money wisely. The financial literacy definition introduces concepts like saving and investing to facilitate money management. Financial literacy has many advantages. First, you learn how to manage your debts so you don’t end up bankrupt, with a poor credit score, or homeless due to foreclosure.
You’re also in a better position to distinguish between legitimate business opportunities and fraud. What’s more, you understand taxation to avoid trouble with the government. Financial literacy doesn’t stop at personal finance. There are many opportunities to improve your financial literacy, which will be discussed above. In addition, the world of technology does not stand still, there are many apps to pump up your skills, so you can use the Android apps and improve your financial literacy at the same time
1. Consult Finance Professionals
From accountants and stockbrokers to debt counselors and investment advisors, finance professionals have different roles. There are many reasons why you should consider a wealth advisor. For starters, they identify suitable investment avenues based on your monetary status and targets. Because they understand industry complexities, money experts prevent you from acting rashly during a financial crisis.
Another benefit is time-saving. Thanks to their experience, finance consultants are faster at analyzing reports and balancing assets in your investment portfolio, in addition to professional services like tax and estate planning.
However, some investment consultants are frauds. Start by verifying credentials. Besides having a clean record with the SEC and FINRA, the advisor shouldn’t have complaints from previous customers. You can also schedule a meeting or call the advisor to ask about their qualifications.
2. Consider Financial Literacy Education Programs
Bookstores and library finance sections are valuable sources of financial literacy. Besides learning from other people’s experiences, financial literacy books provide actionable money management tips. Moreover, consider a financial literacy course that matches your investment level.
You can also read magazines, listen to podcasts, or subscribe to financial literacy newsletters via email. Similarly, join financial literacy groups on Facebook or follow money coaches on LinkedIn or Twitter. But be wary of sketchy finance gurus. The first red flag is missing information. Shady advisors promise high returns and skip important details such as fees and your money’s accessibility.
They also create a false sense of urgency. Scammers ask you to buy their products immediately before you’re out of time. Similarly, avoid advice that is too complex. Don’t risk your money if the investment opportunity doesn’t make sense despite seeking clarification.
3. Designate Emergency Funds
An emergency fund refers to cash reserved for unforeseen expenses. Ordinarily, this fund amounts to six months of your expenditure. That way, you have enough sustenance when you lose your job. The money also comes in handy during medical emergencies like accidents. You may have medical insurance, but some procedures are not included in your cover.
Moreover, the cash facilitates vehicle repairs. You don’t want to miss your journey because your car broke down unexpectedly. You can grow your fund by increasing your income. You could also ask for a raise at work, get a second job, or make money with your hobbies.
Another financial literacy tip is saving immediately you receive your earnings instead of spending first. You could also grow your cash in a money market or savings account. However, use liquid accounts to accelerate withdrawals in the emergencies.
The list of financial literacy examples is incomplete without budgeting. Budgeting is deciding how you’ll use your money. This financial literacy lesson discourages living beyond your means. By creating a spending plan, you determine whether you have enough money for all your expenses. If not, you channel your cash to what matters most.
Budgeting also brings you closer to your investment goals by tracking your progress and limiting unhealthy money habits. Another benefit is increased savings. You have enough for a rainy day when you cut unnecessary expenditure.
The good news is that you can budget even with a low income. Start by collecting financial documents to get an idea of your monetary situation. This includes shopping receipts, credit card bills, mortgages, and bank statements.
The next step is computing your income and listing monthly expenses like insurance, food, rent, and entertainment. You’re overspending if your expenditure exceeds your earnings. As such, find a way to reduce your spending, for instance, substituting takeout with home-cooked meals. Another financial literacy tip is reviewing your budget regularly to ensure it fits your economic reality. You can track your spending using spreadsheets or apps for financial literacy.
Conclusion: Financial Literacy Takes Time
Financial literacy is the gateway to financial freedom. Remember, financial literacy is a lifelong endeavor. Financial stability depends on your openness to learn and consistency in adopting good money habits.
Financial literacy doesn’t have to be boring. You can spice things up using financial literacy games.Some video games require you to answer financial literacy questions before proceeding to the next level. Others test your ability to save and manage debt. What is your relationship with cash? Share some financial literacy basics in the comments.
About the Author:
Jeremy Ambrose started his own small business on the Internet a few years ago. After many failures and difficulties passed, he decided that he wanted to share his experience and knowledge with other people. In addition, Jeremy is the developer of a huge number of Android business apps that help manage people’s finances and manage employees.