Why develop financial literacy?
Due to low financial literacy, many people often cannot support themselves even with high wages. There is also a great risk of falling for the bait of scammers and losing accumulated savings. Therefore, it is worth paying special attention to the formation of knowledge in the field of finance. In this article, we will look at the basics of financial literacy and answer the question why absolutely everyone needs to develop it. And if you want to learn more about how to control and manage your expenses, check out the free Financial Literacy webinar.
What is financial literacy?
You will be surprised, but the ability to earn a lot does not guarantee you that you will always live comfortably. To manage well-earned money, you need to develop completely new competencies that will help you come to independence in the future. Financial literacy is a set of knowledge on how to control and manage financial flows, distribute money wisely and increase income. The main rules of financial literacy: expenses should never be more than income, and the rest of the money should always be invested in any form.
Surely you have met people who make decent money, but at the same time they always do not have enough money. They can be excellent specialists in programming, management or marketing, but they don’t know how to handle finances at all and even manage to get into debt. As a rule, such people spend their money on useless things that are simply thrown away over time.
The formation of financial thinking, the study of economic theories, the development of conscious consumption is the basis for a comfortable and prosperous life. Remember that your well-being in the future depends on how you manage your money today. The most important point is the development of financial thinking. For example, someone is convinced that in order to earn good money you need to work harder. On the one hand, this is correct, but on the other hand, you need to work wisely, and not wear and tear. And also think carefully about your spending. Because there is no point in earning more if your expenses equal your income.
How to improve financial literacy?
No one is born with financial knowledge. Even if you were born into a wealthy family, it still doesn’t mean anything. Financial thinking develops for quite a long time, but you can start changing your view of expenses in a couple of days by starting to study the theory of money, how investments and the financial market work.
Another important skill in the proper distribution of money is discipline. If you begin to strictly control your spending and not go beyond the allotted budget, train yourself to count money and control the balance on the card, then you will be surprised at the result. More than 80% of people spend their salary mindlessly, allowing themselves to buy whatever they want at the moment. And only 20% consider and weigh every expense. Thus, by developing the habit of conscious consumption in yourself, you increase your budget and you will have a chance in 10 years to earn on passive income and live for your own pleasure.
