Financial literacy is the knowledge and confidence to efficiently and effectively manage, save and invest. This can also include how to get out of debt and even budgeting. In simple terms, financial literacy is the ability to understand and use financial skills effectively.
Financial skills are generally the ability to understand how to manage unexpected situations to solve financial problems. The skills can be acquired or learned through financial education.
What is the importance of financial literacy in our lives?
1) Financial literacy helps us establish financial plans for our future. One gets a plan to secure the future through investments of their choice or savings if they prefer that.
2) It also helps us effectively during budgeting and spending. We come up with how and what we want to spend on and the amount we want to save, not using the money we have aimlessly.
3) Financial literacy prevents us from falling into different financial traps unknowingly since we become so enlightened that we understand and know whether we will be able to make some good money from a business or make loses.
4) Financial literacy helps us fix bad financial decisions. Once we acquire knowledge on finance, we get to a position where we only make informed decisions.
5) Financial literacy equips us with the knowledge and skills we need to manage our finances effectively.
Financial literacy is knowledge, and this is power. One can achieve it in various ways, which may include;
1) Meeting a financial coach or professional to guide and enlighten you on planning, saving, and investing. A financial coach can also help you make a plan for all your financial needs and also help you stay on track.
2) Listen to financial podcasts. This is an excellent way of acquiring financial knowledge. It is also a flexible choice and can be listened to when doing laundry, doing house chores, or even during an evening walk.
3) Reading a lot of financial books. You can also choose to explore books if you like them, especially financial insiders, which usually turn out to be very rich with knowledge.
4) Social media is also a potent tool for financial knowledge. You can follow financial experts on social media, as most talk about finance on their pages regularly.
Knowledge is power, and whatever stage of financial literacy you are in, it is essential to keep acquiring knowledge every other day. Start keeping a financial budget because all the financial guidance from professionals and podcasts will be meaningless if you cannot account for your finances and what you spend on. Financial literacy is needed for everyone as it allows us to make rational financial decisions.
