It is extremely essential for an individual to have proper idea and knowledge about finance. There are several aspects and things that you are supposed to explore to be able to gain financial liberty at the earliest.
Financial literacy – the basics.
We all learn the absolute basics of money when we are young; our families and schools teach us the basics, how to add up and how percentages work, helping us to calculate spending and discounts.
However, what we do not get to learn so much about is the further information of the financial world. Financial literacy.
We have much to consider in our finances, from banking, budgeting, saving, debts, credit, the types of bank accounts, and money management. It may seem a little overwhelming at first, but it is not quite as bad as it looks once you get the hang of it.
CreditNinja.com and other sites can help you understand the complexities of financing when you decide to start learning how to be more financially literate.
However, today, we have got your back and will discuss all you need to get started on your journey to financial literacy.
What is it?
So, let’s start with the simplest bit, what is it?
At its core, financial literacy is understanding and using a wide variety of financial skills.
This can include everything from basic personal finance management to investing. Being financially literate also means being able to understand the principles of financing.
This means you understand and can use the value of money, interest, debt, and how to plan financially.
Being financially literate helps protect you from making any unwise decisions with your finances. It lets you be more self-sufficient and be more financially stable in the long run.
The biggest stepping stone to achieving this is to start with budgeting and tracking how you spend your money, as well as paying off your debts. Many will also include planning for retirement, but that is more your call.
It is well worth learning to be financially literate, as it can save you a lot of financial grief and allows your finances to spread wider and further.
Why is it so important?
You may consider that no one taught you about this before, and if it is not taught, why it is even necessary.
Well, trends state that financial literacy among most Americans is in rapid decline. This means that most people are unaware of interest, inflation, bond prices, and diversification.
A survey was even conducted with five questions about financial literacy, and only a shocking 34% got ⅘ correct answers!
This shows that a majority of Americans are unaware of how to be financially literate, and this may be the reason for the ever climbing amount of debt in the average American’s life.
Being financially literate will help you manage your finances, so you can get out of debt, and be able to save your money better. This will hopefully, eventually take you to the glorious goal of financial freedom!
The most basic level of financial literacy.
What are the basics of financial literacy? Well, the basics are simply the personal financial decisions you make. This includes which savings and investments you use.
It is all about how you make your financial goals, even on the simplest and smallest level.
Whether you are trying to save for your kids to go to college, planning your retirement, paying off debts, or to own your own home, this is the most basic level. Overall it includes banking, debt and credit management, investments, and budgeting.
We will take a look at some of these basics of financial literacy to help you get started on the road to financial literacy.
Budgeting.
Whether you are doing well already, or perhaps not so well with your finances, it is always worthwhile budgeting.
This is one of the primary building blocks of having a successful personal financial plan. Even though it is easy to grasp, it is not relatively easy to do. Easier said than done, per se.
Budgeting requires us to take a long, hard look in the mirror at how we spend our money and how we may have bad habits that lead to financial difficulties.
It means we have to analyze ourselves and our spending, and then, we have to change them. Instead of letting our money control our lives, we have to switch things around and start managing our money more.
We might have bad habits in our spending, and now we have to break those habits and learn new, healthier financial habits.
Budgeting is hard to do, and it takes strength to do it, but once you have done it, you can better save, avoid any financial crises, and maintain inner financial peace.
Saving.
Saving is a glamorous successor of budgeting. If you can nail budgeting, you have savings to look forward to.
It is an essential part of budgeting, but it comes with an even better feeling. Having a savings account is like having someone carrying a crash mat around wherever you go.
It is a fallback. You will have your savings ready to prevent emergencies, stop you from seeping into debt, and help you build up a financial plan for large future purchases.
You can keep savings aside for whatever you want, but it is a safeguard.
This is what people love most about financial freedom and literacy, and it is well worth having. A healthy savings account is the result of smart and successful budgeting.
