How to achieve Financial Literacy

Self development is a strong step to achieving a better life and ofcourse, a better life needs “Funding.” Financial literacy is a life saving skill that will prevent you from “shooting yourself at the foot”.

Financial literacy is critical to successfully planning for the future. In this article, we discuss what financial literacy is, the benefits of becoming financially literate and steps to take.

What is Financial Literacy?

Financial literacy refers to the ability to understand and apply financial management skills like investing, budgeting, banking, and personal financial management, etc. This is the knowledge that helps someone to take appropriate action regarding their financial affairs.

Steps To Take

1. Budgeting: The keyword here is “needs over wants.” We tend to skip the importance of the scale of preference principle. Note your monthly income and second, track your spending. You need to include all your fixed expenses like your mortgage or rent, utility bills, loan payments etc, and then include variable expenses such as groceries, entertainment, etc.

After tracking your major spending, make sure to set your financial goals while saving money either long or short term.

2. Open a Savings Account: A savings account will help you to save any extra money you have and is the best way to keep your money safe and secure. It may even pay you interest, offer insurance and security. A savings account also makes billing easier and more convenient for the user while an ATM card is portable and better than keeping cash in a wallet.

3. Investment Over Expenditure: Make your money birth more money. A wise financial literate woman said, “instead of buying a bag I clearly don’t need but want, I will check up the price of that designer bag and invest that same amount in stock.” Variety is beautiful but if it isn’t necessary let it be.

4. Understand the danger of identity theft: Identity theft occurs when someone uses your personal information such as your name, Social Security number, credit card number, or other identifying information without your permission to commit fraud or other crimes.The best way to help prevent becoming a victim of identity theft is to safeguard your personal information.

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