What is Financial Literacy and How Can You Improve Yours?

Many people consider themselves to be financially illiterate. They’re not sure about how to manage their personal finances, reduce debt, and save money for retirement. If you’re one of them, chances are you live paycheck-to-paycheck and struggle financially in general. The good news is that so many resources are at your fingertips and becoming financially literate shouldn’t be tough. If you want to work on your money-management skills, let’s start with a few tips on how to do it.

What is financial literacy and why it’s important?

Before we move on, let’s take a step back and discuss what financial literacy is and why it’s so important. Making money won’t get you far if you don’t know how to use it properly. Many people who consider themselves to be financially illiterate make poor financial decisions or even end up being victims of scams. They struggle to get out of financial crises and never get close to becoming financially independent. On the other hand, when you understand the importance of balancing a checkbook, paying off debt, and saving, making better financial decisions is much easier. Not only this, but you’ll have more time and energy for your personal life when you don’t have to worry about your finances.

Start right away

Some people have the luxury of being financially literate as soon as they reach adulthood. Some of them have learned it through education while others learned it at home. If you’re not one of them, it doesn’t mean it’s too late to become financially literate. In fact, it’s never a bad time to do so. All you need to do is find the right resources and put enough time and effort into it. Your safest bet is to start by increasing your knowledge about investing, taxes, and saving for the future. You don’t have to dive headfirst. Learn how to use a free online tax calculator, or perhaps the fundamentals of an IRA. Tackle the topics one by one until you build a solid foundation of financial know-how.

Use tools to improve your financial literacy

We live in the age of technology and it seems like there’s an app for absolutely everything. Many app developers create apps that have for a purpose to help users manage their finances. Adding some of those apps into your arsenal can do wonders for your finances. Start by installing Mint on your device. Mint is one of the best financial tools that advise and help you make the right financial decisions. Budgeting with mint is a breeze and anyone can do it. Most importantly, using Mint will help you take your financial literacy to the next level. Other financial apps you can consider using include You Need a Budget (YNAB), Personal Capital, and Spendee.

Engage in educational resources

As mentioned earlier, there’s a plethora of resources available online, and improving your money-management skills isn’t tough. With such an amount of resources available, it’s important to find the ones that suit your skills and preferences. First of all, you have to decide what kind of content you want to engage in. Do you want to read ebooks? Do you prefer listening to podcasts while driving to work? Identify the type of resources you want and finding the content you can engage in shouldn’t be tough. With new financial trends emerging every day, it’s also a good idea to stay up-to-date. The easiest way to do this is to follow influential people in the financial world on social media. We’re talking about financial gurus such as Jim Marous and Spiros Margaris.

Become a trader

There’s no person out there who couldn’t use some extra money each month. One of the best things about being financially literate is that you’re able to identify the best ways for supplementing your income. If you thought about giving trading a go, there’s no reason not to start right away. Online trading from Nigeria is a great way to make a little extra each month without sacrificing much of your free time.

Of course, before you start you have to learn trading and develop strategies you can use in your trading career. Luckily, you can learn everything online and use trading simulators before you start trading with actual money. Since nowadays everything is on mobile phones, you can do stock trading using a trading app.

Take a financial literacy class

Some people are financially literate because they opted for a career in finances or they learned it home. Not everyone had a chance to do it and so many individuals consider themselves to be financially illiterate. This is why there are financial literacy classes you can take both online and offline. If you find that resources you can engage in online aren’t helping, there’s no reason not to sign up for a class. Most of those classes aren’t pricy and they’ll help you save a significant amount of money every month.

Save for emergencies

One of the most important parts of being financially literate is setting aside a portion of your earnings each month. You never know when things can go wrong and having some money on the side can be a real lifesaver. The best part of it is that if you do it on a monthly basis, you won’t even feel that there’s less money in your budget. No matter how much you save each month, those savings will add up and you’ll have something to work with in case things go wrong. Just bear in mind that things such as car repairs and medical bills can be quite expensive and the more you can save, the better.

The bottom line

Now that you know what financial literacy is and how to improve yours, getting there shouldn’t be tough. Follow the tips covered in this post and you’ll find yourself in a better financial position quite quickly.