November 14, 2019 // What is Financial Literacy, and Why is it Important?:
November is Financial Literacy Month, so we put together this article outlining the steps you can take to improve your knowledge about money. If you have been delaying your own financial literacy journey, it’s never too late to start. Finance is a broad subject, so even if you’re literate in one area of finance, you may have room to improve in other areas. Financial literacy can be empowering and help you make responsible financial decisions towards reaching your goals. With so many different areas of finance, knowing where to start can feel overwhelming. The following tips can help you understand what financial literacy is and how to gain it.
What is Financial Literacy?
Defining financial literacy isn’t as clear-cut as it seems. Many people think of financial literacy in terms of saving and spending, but financial literacy also includes areas of finance like investing or saving for retirement. Others may think of financial literacy in terms of understanding portfolio diversification, market trends, or the functioning of the economy. While these are useful topics to understand, financial literacy doesn’t have to be that complex. Ultimately, it’s all about making responsible financial decisions and understanding why you choose to make those decisions. Here are three tips that can help you improve your financial literacy:
Tip 1: Do Research on Your Terms
Becoming financially literate takes time, and it’s important for you to find the right resources amongst the many books, articles, websites, newspapers, and podcasts available. The best resource for you will keep you motivated, interested, and is convenient for you to access.
Additionally, utilize resources that are targeted to your knowledge level. Finance is full of unnecessary jargon, so it’s easy to become frustrated if you’re at a beginner level. Be honest with yourself about your level of financial literacy. You can always start out at a beginner level and work your way up to more complex resources and information. If you’re more advanced, then look for resources that challenge you and go above what you already know.
Tip 2: Use Technology If It Helps
When used correctly, technology can help you manage your spending, saving, and investing. Managing your finances is key to achieving financial literacy. Apps such as Mint or Digit can track your bills, help you budget, or evaluate your income. There are many other apps to select from, but as long as you’re developing awareness about your finances, you will have a comprehensive understanding of where your money goes. This basic level of awareness is critical to financial literacy.
Tip 3: Get Advice from a Credible Source
Although there is a plethora of great financial resources available (and they may be enough for the basics), finances are incredibly personal. By working with an experienced financial advisor, you can work one-on-one with a credible professional who can help you gain a better understanding of your personal financial situation.
Your financial literacy is in your hands. If you want to prepare for the future, meet your goals, and create the life you imagine yourself living, financial literacy is key. It may not be easy, but it is definitely worth it!