What is financial literacy?
Very simply put, financial literacy and education is when you know enough about the crazy world of economics that you are able to make informed and effective decisions with your financial resources. It’s important to be financially literate so that you can make the right financial decisions for yourself, as well as for your family and your future.
Because we don’t learn true financial literacy in school, it’s an important set of skills to develop sooner rather than later in life. Things you should 100% be familiar with include: personal finance, credit cards and debit cards, savings accounts, interest rates, credit score, and money management.
Why is financial literacy important?
The secret to a happy, safe and secure future is financial literacy. The more financially literate you are, the better you will be with your expenses, savings, and investments. So, if you are someone who fails to manage their expenses, makes financial and investment mistakes frequently, it is probably a sign that you lack financial literacy.
Having said that, financial literacy does come with experience, but experience comes with knowledge. So, it doesn’t matter if you are an amateur or a pro at it, there’s no reason why you shouldn’t begin to increase your financial literacy. (You can never perfect your knowledge, but you can always increase it. Knowledge is after all limitless)
Know it’s never too late to learn financial literacy. Growing up, we didn’t know what finances were, we just knew there was usually not enough to go around, and if there was, it meant we didn’t get anything extra, maybe a little less fighting by my parents.
So, if you are in, and want to make a change for a better future, here are all the ways you can improve your financial literacy.
7 ways to improve your financial literacy
1. Read Financial books
When they said, “Excess of anything can be dangerous”, they didn’t talk about books. The more you read
Best Financial Literacy Books
If you are looking for some recommendations, here are some that you must definitely read:
- Stop Acting Rich and The Millionaire Next Door, both by Thomas Stanley
- The Intelligent Investor by Ben Graham
2. Join an online course
Just as you are never too young or old to gain knowledge, you’re never too young or old to enroll in an online course. You might think that you are past college, your learning days are over. But trust me, when it comes to learning, there’s no age.
Ergo, a great way to improve your financial education is to consider enrolling in courses about financial literacy. You can go for weekend online courses if you cannot make space for them during workdays.
DigitalDefynd is one website you can depend on. For more options, you can visit here. Also, since April is Financial Literacy Month, you’ll often find discounts for courses during this month.
3. Talk finance with the experienced ones
You might frequently forget study lessons, but you’ll seldom forget the important conversations you have with someone. Moreover, when it comes to it, perspectives matter. Talking about financial literacy within your experienced circle would not only provide you with knowledge but develop your perspectives about important things in life.
So, go chat with your boss, friends, or some people in the financial department at your workplace. Those who have the expertise, or experience per se, can give you a lot to learn. Or, if you have the budget, consider hiring a financial advisor to help manage your finances. They can give you financial advice, help you plan for your financial future, and even assist with long term retirement planning. Hiring a financial advisor is a really good idea if you’re dealing with estate planning. When you’ve got that much in the works, a financial advisor can really come in handy.
4. Read financial newsletters and magazines
Remember why we were always told to read newspapers? Because it increases knowledge. Likewise,
Ditch scrolling your phones in leisure time, instead read to boost your financial knowledge.
You can also subscribe to various newsletters of your favorite financial websites to keep yourself updated with the ongoing events. Make it a goal to read at least one article or financial newsletter before going to bed.
5. Practice Budgeting
You might forget theoretical knowledge. But when it comes to practical knowledge, these are the lessons you learn for life. Not only will it make you financially literate about your own budget but enlighten you about new financial concepts.
If you don’t do budgeting, you can start with the basics. Record all your transactions during the month, total them, and now compare the number with your monthly earnings. The total amount you have saved defines your monthly financial standing. Additionally, how you use your saved money is equally significant. If you are just starting, don’t use all of it towards investment – all the more, do not invest if you lack the knowledge. Talk to an expert before you start.
6. Use social media for enlightenment
Social media is a blessing, but most of us use it for all the wrong reasons. Trust me, using it to keep a tab on
Moreover, you can also use social media to be a part of a network that emphasizes or shares interests about financial literacy, same as yours.
7. Have a mentor
Almost all the great legends out there have someone they feel grateful to, someone who has made them who they are. They had their mentors who inspired them in life. So, if you too can think of someone like that, let them be your mentor. It’s advisable to pick someone who possesses the financial literacy that you aspire to have.
Should Financial Literacy Be Taught In School?
Let me know your thoughts below! In my opinion, of course it should! According to the Literacy and Education Commission, children and young adults need to be taught financial literacy for a plethora of reasons. But, the most important reason is to prepare the next generation for this crazy world of finances.
However, since its not taught at school as often as we’d like to see, it needs to be taught at home. If you’re ready to start talking to your kiddos about finance, check out these 7 ways to raise money-smart kids.
All in all, improving your financial knowledge is not a short-term process, it is not a test you can pass and declare yourself to be financially literate. It’s a journey without an end. You cannot be the best, but you can be better. So, be consistent, don’t wait for short-term results.
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