Understanding Financial Literacy

 

In today's world, you need to understand everything about how to manage money, if you want learn more about Financial Knowledge, then you must learn all about Financial Literacy, and Let me tell you why it's very important: is the ability to understand and effectively that use various skills including personal financial management from budgeting and saving to debt management and retirement planning. it can also be a understanding of concepts, tools and especially strategies that will help you to make good decisions about money, but it's not just about having them but knowing how to manage them well and effectively. 

In case that you don't know, that Financial Literacy wasn't taught in schools 

There are ways that could while learning about Financial Literacy:

• Investing wisely
• Budget and save money
• Learn and understand about credit and debt
• Retirement planning
• Make decisions about insurance and taxes

• Saving and Emergency Fund
• Managing Debt
• Investing for the future
• Understanding credit and score
• Retirement planing

Why all of this matters and very important to learn:

• Try to Improve Financial-Decisions
• Reduce Stress
• Avoid Problems

1. Budgeting:

A  plan of how you outline your income, expenses and other financial goals like savings and debt paydown and of course you write down to decide how you'll spend your money each month. It can also be a tool to help you with tracking your spendings, keep your finances under control, making adjustments to your spending, deciding where your money goes, and of course, for your financial goals. 

Here are different types of budget methods that can be really interesting that you could choose one to fit in your lifestyle:

• 50/30/20 Rule: it recommends putting 50% of your money toward needs, 30% toward wants and 20% toward savings.

• Pay yourself First: a strategy that prioritizes saving and investing before addressing other expenses. 

• Zero Based Budgeting: is a budgeting method that involves starting each budget from scratch.

• Envelope Budgeting System: is a budgeting method that involves dividing your budget into categories and assigning an envelope to each.

2. Saving and Emergency Funds:

A emergency fund can be very important to build, cause it can be separate from your daily cash to make sure the funds are there when you really need it.

• Start Small
• Make a Budget for extra money
• Open a saving account
• Prioritize savings over other goals
• Avoid using fund for non-emergencies
• Be prepared and be calm

3. Investing: 

Is the ability and act of putting money into assets or projects with the expectation of earning a profit or gaining something of value. 

How does it work?

• Buy assets like stocks, bonds, mutual funds, exchange traded funds or real estate.
• Buy asset at low price and sell it at a higher price.
• Buy assets that generate income over time.

How to start investing?

If you're interested of start investing this year, but before you put your money into the stock market, you'll need a basic understanding of how to invest your money the right way. 

You need to understand that you're taking a risk while investing in stock markets, you can earn money but you can also lose it all, plus investing is not easy it's gonna take a long time to understand and how it suits you. The only way to invest your money is the way that works best for you, in my case make sure you have a strategy or a plan.

• Research
• Educate yourself
• Prepare yourself for investing
• Understanding risk 
• Be patient
• Set Investment goals

Why should you? 

• Grow your Wealth
• Achieve Financial Independence 
• Financial goals
• Compounding Interests
• Tax benefits
• Planning for Retirement fund
• Gaining more experience

Remember that this is gonna be a long journey but a very good one. Because the more you understand, the more you'll be prepared to make good decisions and of course, archiving your goals.