Important Tips to Become More Financially Literate

Money

You may think that financial literacy is only of interest to the wealthy, but the most important fact to know about financial literacy is that you can’t achieve wealth without it. This is why many people who win large sums of money in the lottery, even smaller amounts of $100,000 or more, find themselves back at their original financial starting point. So use the information below as your personal growing point to add to your knowledge base of finance and investment.

We will start with the most important component of financial literacy – you. It is you who will decide how much time you will spend acquiring knowledge, and it is you who will decide what to invest in and when. You can learn the knowledge but you will have to apply what you know, then choose to learn more whether the outcome is a profit or a loss.

Once you understand that financial literacy and success is about you, learn how to create a budget. One of the most common yet financially poisonous mistakes is to believe that managing debt is an important part of a budget. If you have zero debt, this is the best place to begin learning about budgeting. If you already have debt, then of course you have to manage it as part of your budget. Budgeting is realistically more focused on managing the money you will have left over after paying the bills rather than just trying to make ends meet.

After you establish a budget, which should include setting aside money for savings and investment, you need to understand debt. Many people separate credit from debts and loans. What they all have in common is it is money you will have to pay back to someone. It is not really your money, especially money that is available on your credit cards. Debt is money that is someone else’s until you pay them back.

A topic of financial literacy that is annoying to many people is the subject of insurance. Younger people who are financially astute recognize that certain types of insurance, such as life insurance, are best invested in at an early age as the rates will be significantly lower than by waiting 5 or 10 years. Insurance is an investment because it protects you from unexpected events that will definitely impact your financial future. Ask people in California who did not have fire insurance on their homes, or people in Florida and the Midwest who did not have flood insurance about this basic financial reality.

Up to this point the focus has been on the broader topics of finance and investment. But there is a mistake that needs to be avoided – using the Internet to add to your financial literacy knowledge base. There are those who strongly recommend the Internet for many reasons: it is free, there is a wide range of topics you can research, and you can learn anywhere if you have a mobile device. What usually is not said is how you can tell between websites or podcasts that offer quality information and those that will steer you down the wrong financial path. The best approach is to browse several independent websites or podcasts and compare notes. What most of them agree on, pack it away in your knowledge base for future use. Everything else put in the “financial knowledge temp” folder and decide later the value of the information.

Finally, there is a critical but essential element of financial literacy often overlooked by financial advice articles. In order to successfully use your newly acquired knowledge you need to switch from having a consumer mentality to having an investor mentality. At its most basic level, there are only two things you can do with your money: keep it for yourself or give it to someone else. If you invest your money you are giving it to someone else who you hopefully trust will do the right thing with it. The other side of the coin is you can give your money to someone who will give you a product or service in return for your money. The difference is that when you approach life with an investor mentality you believe that your money will be returned to you with a certain amount of profit. In contrast, the consumer mentality almost always results in money going into someone else’s hands, never to be seen again. Always choose the investor mentality.

Your level of interest in financial literacy will be directly proportional to your financial success. The more money you have to invest, the more you will want to know about the financial markets and general economy. If you have little or no money and remain in that position, your interest in financial literacy will stagnate. If you’re stagnant, now is the time to start learning how to position yourself to be a successful saver and investor.


Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

10 Things you Didn’t Know About Xudong Cao
Groww
20 Things You Didn’t Know About Groww
Ali Ghodsi
10 Things You Didn’t Know about Ali Ghodsi
Protein
Five Companies Leading The Way in Alternative Proteins
NFT Market
The Top Five NFT Marketplaces Out Right Now
Activist Investors
What Exactly is Activist Investing?
Apple Products
Five Stocks That Most Billionaire Investors Own
Venture Capital
The Rise of the Venture Capital Scene in Africa
The Village
The 10 Best Places to Live in Oklahoma City
Straight Wharf
The 10 Best Restaurants in Nantucket
Forest Glen
The 10 Richest Neighborhoods in Chicago
Shildon, England
10 Cheap Places to Live in Europe That are English Speaking
McLaren Models
The Top Five 0-60 mph McLaren Models of All-Time
1998 McLaren F1 LM
The Five Most Expensive McLaren Models of All-Time
Review of the 2021 BMW X5 xDrive 45e
Does McLaren Make an SUV?
Hermes Klikti watch 17 x 16 mm
The Five Most Expensive Hermes Watches Money Can Buy
Louis Vuitton Tambour Daimer Cobalt Blue And Gold Chronograph 46
The Five Best Louis Vuitton Watches Money Can Buy
Chopard Alpine Eagle Ladies' Small
The Five Finest Gold Chopard Watches
Chopard
The Used Chopard Watch: A Buyer’s Guide
Nick Carter
How Nick Carter Achieved a Net Worth of $40 Million
Mac DeMarco
How Mac DeMarco Achieved a Net Worth of $3 Million
Brenda Song
How Brenda Song Achieved A Net Worth of $5 Million
Michael Keaton
How Michael Keaton Achieved a Net Worth of $40 Million