When it comes to financial literacy, nearly 50% of people consider themselves to have intermediate knowledge, with 40% stating to have advanced knowledge. Financial literacy extremely important when taking control of your financial future.
It is defined as the education and understanding of various financial areas including managing personal finance, money and investing according to Investopedia.
Having financial literacy skills is essential to mastering your personal finances. The more knowledge you gain, the better you will be able to understand the nuances that come with managing your money. This knowledge will come in handy at every financial stage of your life, making transitions and roadblocks easier to manage. In order to level up your financial literacy, you are going to need to learn the basics.
Get Comfortable Talking About Money
First and foremost, you are going to want to get comfortable talking about money. Discussing finances can lead to tough conversations that lead to stress, anger, and resentment. Because of this, most people avoid this conversation at all costs. People also may not feel comfortable in their knowledge to even begin the conversation.
It is incredibly important to be comfortable talking about your financial situation. It will help you to talk to advisors, ask your partner questions, and understand your personal finances to help guide future decisions.
Have Basic Budgeting Knowledge
Trying to figure out how much you should save, invest, and spend is a daunting bridge to cross, especially if you are just starting out. Only 30% of Americans have a long-term financial plan that includes savings and investment goals according to the Bureau of Statistics.
If you’re looking to boost your financial knowledge and master budgeting, look no further than this simple budgeting formula to start. The 50/30/20 rule was coined by Elizabeth Warren—U.S. Senator from Massachusetts and named as one of the 100 Most Influential People in the World by Time Magazine. This has turned into the budgeting rule of thumb and a great place to start learning more about finances.
Mastering your basic budget knowledge will level up your financial literacy. Having a good understanding of spending, saving, investing, and how they interact is the basis of all personal finance. Learn more about these essential topics here.
Know Your Credit Score and Improve It
A common financial factor that many people forget to monitor their credit score. Credit is an extremely important part of everyone’s financial journey. It is something that, no matter what your income, can really benefit you and your wallet. Having good credit is essential when renting an apartment, buying a home, buying a car, and other high profile financial decisions.
Having fundamental knowledge of the do’s and don’ts when it comes to credit is extremely important part of becoming more financially literate.
Learn about boosting your credit score here!
Have a Solid Debt Payment Plan
Financially savvy people always have a plan when it comes to paying back what they owe. However, the unfortunate fact is that most people don’t have a plan when it comes to their debt. Around 1 in 5 millennials expect to never pay off their debt.
Debt is a common, if not inevitable, problem that most people have to deal with. It can put strain on your relationships, family, and overall emotional well being. But making the decision to overcome your debt regardless of how intimidating it may be, is one of the best financial moves you can make.
No matter how big or small your debt is, with strategy and hard work, you can come out on the other side. Check out these strategies and plans out there that can make a debt-free life, a reality.
Building up your financial literacy will only help your bank account in the long run. Having a strong grasp of your personal finances will help guide future money decisions. To get started, check out our blog for more resources to help build your arsenal of financial knowledge.