We hear a lot of talk about financial literacy, particularly in this decade, but do we really understand what this term means? Why is it so crucial to be financially literate? What are some of the benefits that we stand to gain if we are financially literate?
Financial Literacy is the knowledge and understanding of how money works, how to make proper use of our resources and disposable incomes and the ability to minimize debt and achieve financial freedom.
One of the most crucial skills that a person can learn as they grow into young adults is the ability to manage their money. Sounds pretty easy, doesn’t it? But if it were as easy as it sounds, then there wouldn’t be so many people drowning in debt, or living on a hand-to-mouth basis.
“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” – Dave Ramsey
As such, learning how to manage your money and transform your resources into wealth is an indispensable skill.
How can you improve yourself to be financially literate?
- Read a lot. It sounds very basic, but knowledge is power. That theorem has never changed. The more you read, the more exposed you are to a different way of thinking and hence the more knowledgeable you are.
- Consult an expert. Most financial experts are trained by bodies such as the Chartered Financial Analysts Institute and are fully equipped to handle your personal finances and help you manage your wealth.
- Use financial management tools. A lot of people are learning to rely on modern technology to help them manage their money with applications such as loan calculator applications, among others.
The ability to manage your money and gauge your spending is a critical skill. In fact, it is so crucial that most experts believe that the introduction of financial literacy as a course in schools is the key to a great future.
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki
The Rich Dad, Poor Dad book by Robert Kiyosaki is a great place to start in your journey towards financial freedom.
