Financial literacy is a topic that is often neglected in the education system. This lack of financial knowledge can lead to poor decision-making and even bankruptcy for some people.
How your understanding of money management can change your life?
It is defined as “the degree to which an individual can make effective decisions about managing personal finances.” It’s important because it can affect whether or not you have enough money in retirement, buy a house, or maintain good credit. It also includes basic mathematical skills like balancing a checkbook and calculating interest rates on loans. The more financially literate someone becomes, the more likely they are to take steps towards meeting their goals.
There is no such thing as a “money tree,” but there are many things you can do to have more money. Literacy means being responsible with your money to work for you instead of the other way around.
Follow these steps to become financially literate:
- figure out how much money you make per month,
- figure out what percentage of your monthly income goes towards necessities like rent/mortgage, food, and utilities
- set up an emergency fund
- save some money each month
- take care of yourself by eating healthy and exercising
- don’t spend all your paycheck at once
- start investing
- buy stocks
The benefits of financial knowledge are multifaceted and can be seen in a variety of areas. Financial knowledge is not only important for individuals to have but also for organizations as well.