What is financial literacy?

Financial literacy is the ability to make informed decisions about personal finance. It includes essential money management, understanding credit, debt, and investing.

Financial literacy also involves understanding insurance products, such as life insurance and disability insurance.

New age financial advisor Robert kiyosaki says in order to become financially free you must have a basic understanding of 4 core subjects namely: Marketing, Accounting, Investment and Law.

Why is financial literacy important?

Becoming financially literate is like learning to drive. You must know the rules of the road to navigate your way through life successfully. It’s impossible to become an expert driver without knowing how traffic lights work, what a stop sign means, and how cars move on busy roads.

Similarly, it’s impossible to properly manage your money without understanding how banks work or what fees they charge; what inflation means for you as a consumer; and why interest rates are so important (and how they affect borrowing). By becoming financially literate, you’ll be able to make sound financial decisions that will help you get ahead in life and eventually attain financial freedom—just like learning how cars work helps us get around more safely.

What are the benefits of financial literacy?

Financial literacy is essential for everyone, but the benefits are especially pronounced for young people. Evidence shows that a financial literacy course can help you earn more money, become financially free, and even increase your chances of landing a job. It could also help you avoid debt or bankruptcy by making smart choices about how to spend and save money.

Financial literacy can even help improve your credit score! That’s because knowing how credit cards work—and understanding why it’s essential to pay off your balance each month—will make lenders think highly of you when they look at their records.

Where do I start with learning financial literacy?

• Start with a budget.
• Start with a savings goal.
• Start with a credit card and score.
• Start with a financial calculator.
• Start with a financial literacy book or course, like the Financial Literacy Bootcamp from Financial Finesse or our own financial freedom online course.

Who should learn about financial literacy?

• Everyone. Financial literacy is an important skill, and it’s never too early or too late to start learning about money. Some experts recommend that kids start learning about money as soon as they can count (at least by kindergarten).
• Teens, young adults, adults, and seniors. Whether you’re 16 years old or 60 years old, there are many reasons why you should learn about your finances:
• If you want to start a business someday
• If you’re currently working and would like a better understanding of how taxes work (and whether you should be contributing more money towards retirement)
• If your kids are asking questions about saving for college or their first car

How can I improve my financial knowledge?

Here are a few ways to improve your financial knowledge:

• Read books on personal finance. There are many great books out there that can help you learn how to manage money and make it work for you.
• Use a financial calculator to crunch numbers and make sense of confusing financial concepts. Make sure you have the right calculator for the task, such as investments or loans.
• Use a financial management app (or several) to keep track of all your account balances, transactions, expenses, and bills so that they don’t slip through the cracks when life gets busy.
• Work with a financial advisor—this person will answer questions about specific situations and provide advice about how best to handle them financially for things like retirement savings plans or college savings accounts to become more accessible.

6 STEPS TO FINANCIAL LITERACY

1. Begin with a budget.

If you’re unfamiliar with budgeting, it’s a way of allocating your money to fulfill your goals and have some left over for emergency savings. If you don’t have a budget, chances are that when something comes up—a medical bill or an unexpected car repair—you won’t have enough saved up to cover it. The first step to financial literacy is ensuring that each month starts with a clean slate so that there’s no backlog of bills languishing in your bank account.

To create a budget:

• Define what is and isn’t included in your spending plan
• Set realistic expectations for how much money goes out and how much comes in every month

Below are the best apps to help you budget.

• Mint
• Good budget
• YNAB
• Every dollar
• Personal capital
• Pocket guard
• Honey due
• Fudget

2. Improve your credit score.

If you want to improve your credit score, start by understanding how it works. Your credit score is between 300 and 850, reflecting how well you manage your finances.

It can be used to determine whether you’re eligible for things like loans and mortgages, and it’s often used as a measure of trustworthiness in other areas of life, too—like the ability to rent an apartment or even get a job. You may already know that having good credit is essential for many things, but did you know that having poor or bad credit can also impact what kind of insurance premiums you pay? If ever there was a reason to take care of this part of your financial health.

The range goes from 300-850: below 600 means poor; above 650 means excellent. Most people fall somewhere between 650-700 on average; this means they have good credit scores with room for improvement (if they improved their scores by just 10 points). The higher the score, the better—but there are some cases where lower scores could still be considered good, too (we’ll get into those later).

The following apps helps to boost your credit score

• Credit karma
• Credit sesame
• Mint
• Credit wise
• My FICO

3. Protect your assets.

Protect your assets by having a power of attorney, which allows someone else to make decisions for you if you cannot do so yourself due to illness or injury (as well as other situations).

Protect your assets by having an emergency fund.

Protect your assets by having insurance.

Protect your assets by having a will.

Protect your assets by having a trust fund.

4. Save for unexpected expenses.

The best way to prepare for unexpected expenses is to set aside a small amount each month. If you can’t afford to save up $100 or more, then start with something smaller. This might mean putting aside $50 or even less per month. Make sure it’s money that will stay in your savings account until it’s needed, without being touched for other things like groceries or entertainment.

By saving this much each month, you’ll be able to cover things like car repairs, replacing broken appliances, and sudden medical bills without taking out a loan or putting the expense on credit cards (which can have high interest rates).

5. Reduce spending on wants and one-time purchases.

Reduce spending on wants and one-time purchases. You don’t need to make a budget if you’re disciplined enough to stick to what you have, but it can help if you’d like some accountability. This is especially true if you’re prone to impulse shopping or taking out credit cards for fun things.

For example: If an item has been on your wishlist for months (or years), consider waiting until the price drops before purchasing it. Even better, ask yourself if there are any cheaper alternatives available in stores near your home or online at sites like Amazon Prime Day Deals.

6. Diversification: Split your income into checking, savings, and investments.

Now that you’ve taken the plunge and opened a checking account, set up the other three parts of your money management system.

• An investment account: This is where you’ll keep cash for investing in stocks, bonds, mutual funds, and other vehicles for growing your wealth over time. You should have enough money in this account to cover six months’ living expenses.
• A retirement account: These are intended for long-term savings (you don’t need to tap into these funds until you retire). You can invest this money through an IRA or 401(k), or use it to save up for major purchases like a house down payment or car repairs by having part of your paycheck automatically put into an escrow account each month until it reaches its goal amount.
• A savings account: Use this one only when necessary — like if something unexpected happens like car trouble or an emergency trip to the dentist — because once all three accounts are full, there will be no place else left to put extra cash.

We need to know the basics of money management to make the most out of what we have.

Let’s face it: money management can be confusing. That’s why we need to know the basics of money management before we make any decisions. Some people might think they already know everything they need, but they don’t. Financial literacy is important because it can help us make better decisions about our money and avoid financial mistakes, which eventually leads us to financial freedom

Financial literacy books

• Rich dad, Poor dad
• The richest man in babylon
• The intelligent investor
• The millionaire next door

Conclusion

It’s not easy to learn about money management, but it’s important to understand the basics. If you want to be financially savvy and make the most out of what you have, start with a budget and an emergency fund. Then save for unexpected expenses, reduce spending on wants and one-time purchases, and split your income into checking savings investments. You may want to ask yourself questions such as “What do I spend my money on? What are my priorities? Do they align with what I am spending in each category? Where can I cut back if needed?”

All the information in this article is putting you on the right track towards financial literacy but if you are interested in taking a closer step toward financial freedom you can click the link FINANCIAL FREEDOM to check out our financial freedom program. We update our course contents regularly and you’re guaranteed to live the life of your dreams.

Our financial freedom program is uniquely different and the best in the sense that we provide you with secrets not shared by other gurus. Our program is divided into two sections.

1. We cover all the key secrets and investment strategies given by other top gurus and in addition

2. We provide and teach you how to tap into the foundation of all wealth and riches, which is the manifestation of secrets (Self-knowledge) and Self-development strategies.

This is your blueprint on your road to financial literacy and financial freedom which helps you to manifest and live the life of your dreams. With the right foundation set in place, you’re guaranteed to remain a multi-millionaire irrespective of the obstacles you face along your financial freedom journey.