Do you struggle to make ends meet with your fixed income?

Do you fear surprise expenses?

Do you wish to have smooth spending the entire month?

Do you pray for a genie to appear and help you out in managing the money for a stable and carefree living?

Do you hope to find an easy-to-understand direction that can guide you on the importance of financial knowledge and skills so that you are not in a panic mode on the last ten days of the month?

Well, if you answered yes to any of these questions, you, my friend, are in the right place!

This guide is designed especially for you. It will take you on a blooming tour where you’ll learn all there is to financial literacy.

Find how you can become a beginner finance noob to a stress-free expert that knows how to manage money the easy way. Let’s get it!

What Is Financial Literacy?

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You can only master a thing if you really understand its meaning. So, what do you think of the term financial literacy?

Nah! It’s not some kind of a finance vocabulary. :p

Nope, it’s not a course you have to enroll yourself into for the best grades. (or maybe you have to. Hehe!)

In simple language, financial literacy can be defined as:

• Ability to manage money
• Insight to invest money
• Planning to handle debt
• Knowledge to save money

In fact, the following financial wellness skills are all included in financial literacy:

• Tax planning 
• Clearing of debt
• Getting insurance
• Retirement saving plan
• Real estate investment
• Budget planning

Controlling the unexpected financial changes is surely not in your hand. But planning to become a self financial advisor for the bad times is definitely in your control.

Why Is Financial Literacy Important?

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Financial education is crucial to living a financially stable life. It gives you the confidence and ability to manage your finances on good and bad days.

So, what will happen if you haven’t enlightened yourself with basic money management knowledge? You’ll most likely suffer in routine aspects. You might not know:

• How to choose the right secured credit card account for you
• How to plan the retirement savings for your future 
• How to pick the Visa credit card that’ll help you with your debt
• How to set financial goals for your interest rates

Hence, the more financially literate you’ll become, the more knowledge you’ll have to apply to your current lifestyle.

5 Fundamentals of Financial Literacy

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If you want to enter the world of financial literacy like a pro, you need to excel in the five concepts of financial literacy. Here they are:

• Know Your Earnings: It is to understand what you earn. Before looking for any other principle, you first need to know your paycheck completely. Then, calculate your gross-net income and deduct any insurance, saving, or other expenses from it to have a final amount as total income.

• Track Your Spendings: Now that you have a complete sense of your earnings, it is time to plan how you would spend it. This step includes financial planning and budgeting. First, keep track of every little spending. Then, divide the expenses into categories for the best results.

• Save What You Can: Financial literacy teaches you how to save and spend the easy way. Goals: Decide to improve your Equifax credit score and increase your financial opportunities. Set aside money every month to add to your emergency fund. 

• Borrow With A Thought: If you are a 9-5 employee or someone who lives from paycheck to paycheck, it’s a norm to borrow a bank loan or credit card to cover your big purchases. However, it will all work for you if you know how to maintain your score. Just pay bills on time, improve your credit score, and pay down your debt.

• Protect Your Finances: For your investment plan to work fine and savings fund to rise high, you need to protect what you earn. Remember to track your spending, monitor your Equifax credit report for errors, and secure your account passwords to avoid fraud.

Six Ways To Improve Your Financial Literacy

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Enough with guiding you on everything about the importance of financial literacy. 

It’s finally time to lead you on the successful strategies that can help you improve your financial knowledge.

• Newsletters Subscription

You have just decided to educate yourself and don’t know where to start. Let’s help you out!

Do you know?

Subscribing to a top financial literacy newsletter can be of great help if you are just a beginner. Here are some practicing tips for you:

• Look for a trusted and authentic source like Financial Consumer Agency
• Subscribe to the top financial literacy blogs
• Don’t dive right into the complex stuff, but start with basic knowledge

Listen To Podcasts

If you find it hard to read and skim through enormous content to find the right information, you can always listen to a podcast.

The best thing about it is that you can listen to the start or conclusion and conclude whether or not it’s suitable for you.

Pro-Tip: Click to find the list of top 10 best personal finance podcasts by Time.

Join Events

The world is full of good things waiting for you to find them.

So is the case with all those community events whose sole purpose is to guide the people on managing money. They can be virtual, in-person, or arranged by your housing society.

Literally, they are held everywhere in the form of seminars or online talks. You just have to look around to find the one for you.

• Join online groups that discuss financial literacy

• Subscribe to participate in an online seminar 

• Use your social media to find financial advisors who offer help

Invest In Books

Book reading is a great way to start your financial literacy journey.

You can carry it along and read a few pages whenever you find the time. Then, you can mark the important points and be the pro you want.

The Financial Post picked the top 11 finance books one should read before turning 30. And, when we say we totally agree with their findings, we really mean it. 

Of course, you can benefit from the knowledge even in your late 40s, but you get the point right. :p

Set Goals

Budgeting and planning are essential for financial literacy.

You can’t just think of improving when you don’t know what to improve. Goals can give you a sense of direction and confidence boost that will urge you to keep moving towards achieving it.

• Set financial goals for the week and budget accordingly
• Don’t forget the retirement and tax planning as you budget
• Make realistic goals and plans that you can actually follow 

Think About Long-Term

If there has to be a beginner's financial tip to save your future, an early investment must be it.

When you start investing earlier, you’ll have something to look forward to in the future.

Being financially literate means knowing what’s best for you. And, if you think about your long-term goals, an early investment can be the best choice.

Debunking 4 Financial Myths

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Some financial lessons are hard to learn, and most people only realize them once it’s too late.

So, let’s read some unbelievable personal finance and money myths for the sake of financial literacy:

You Can Only Invest If You Have Extra Money

Busted!

You can never have enough money. So as your income increases, so do your expenses.

You can never have the extra cents if you just wait for a miracle or a lottery to help you out.

It’s Too Early/Late To Plan For Retirement

Busted!

The best time for retirement planning is now! Yes, if you’re still in your earning stage, you can always start saving for your retirement now.

It can be in the form of a fund, investment, estate property, or whatever suits you as per your income.

Borrowing Money Is Not An Option

Busted!

Let's be clear on this: unless you were born with a gold spoon in your mouth, you have to borrow money at least once in your life.

It can be a mortgage, investment, business, or study loan. So, if borrowing once can save your future spending and savings, it’s fine.

Credit Cards Equals High Debt Risk

Busted!

If you know how to pay on time, avoid late payments, and maintain a good score, a secured credit card will work in your favor.

In fact, you can also benefit from the reward programs or free bonuses to enjoy the spending.

Conclusion

Financial literacy focuses on your positive spending and saving habits and makes sure you aren’t starving, but moving on the right financial track.

In addition, it can give you a confidence boost to flaunt your knowledge in every money decision you make.

All the reasons why you should spend time getting better at it!