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How financially literate are you? 3 things you should know about your money

Financial Literacy

Financial Literacy

While kids and teens get to learn about a lot of stuff, most families and schools do not teach them how to manage their money. In some families, it is considered a taboo subject and many friends are too busy showing off to help others manage their finances.

Even the basics of financial literacy are not taught at an early age, resulting in many of us falling into the trap of consumerism and debt.

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How financially literate are you? 3 things you should know about your money

How financially literate are you? 3 things you should know about your money

https://ideas.ted.com/how-financially-literate-are-you-3-things-you-should-know-about-your-money/

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Key Ideas

Financial Literacy

While kids and teens get to learn about a lot of stuff, most families and schools do not teach them how to manage their money. In some families, it is considered a taboo subject and many friends are too busy showing off to help others manage their finances.

Even the basics of financial literacy are not taught at an early age, resulting in many of us falling into the trap of consumerism and debt.

In And Out

Most of us know how much we make, but we need to pay close attention to how much money is actually coming in post-tax, and how much is going out.

You can start by writing down your Starbucks, Uber, Amazon, and take-out expenses, along with your car insurance, utility bills, subscriptions and memberships. Slowly we can realize that many of these small expenses add up to huge figures.

Review And Analyse

By noting down all your expenses on pen and paper, or on the PC excel sheet, you can start to review and analyse your spendings on a weekly or monthly basis. This will make you find innovative ways to save money, catching hold of ‘runaway spending’ that went unnoticed before.

Example: You could find that the $5 Smoothie that you had every day, could cost much less if you made it at home.

Know Your Scores

Knowing your credit scores and the details of the mortgage, loans and credit card activities that impact it, can help you manage your financial credit. You can find ways to improve your credit score once you check it for free using a variety of apps and websites available.

Before you take a big loan, it is advisable to check your credit score in all the available agencies in your country.

Credit Card Debt

The trickiest form of debt, which is literally bleeding our finances, is the credit card debt. Make sure you know what the interest rate being charged is. Know that a 2% interest rate per month is actually 24% per annum.

If you stay out of debt by paying the total due on time, and not compound the interest, having a credit card with a good score can affect your credit score in a good way.

EXPLORE MORE AROUND THESE TOPICS:

SIMILAR ARTICLES & IDEAS:

3 Financial Basics
  1. Create a Financial Calendar: prevent yourself from forgetting quarterly tax payments and to get credit reports.
  2. Check Your Interest Rate: Pay off loans, open saving accou...
Budgeting Like a Pro
  • Consider an All-Cash Diet, as limiting yourself to physical currency combats overspending.
  • Set aside 1 minute a day to check on your financial transactions, to identify problems, track goal progress and set your spending tone.
  • Allocate at least 20% of your income to financial priorities like emergency funds, debts and retirement fund.
  • Budget about 30% of your income for nonbasic spendings, like entertainment. Abiding by the 30% rule, you can save and splurge at the same time.
How to Get Money Motivated
  • Draft a Financial Vision Board, it motivates and helps you to stay on track with your financial goals.
  • Set specific financial goals stating the reason, the way, numbers and dates.
  • Adopt a spending mantra, a phrase that serves as a rule of thumb for how you spend.
  • Love yourself. Taking control of your finances is part of that.
  • Make bite-size money goals. Make the bigger ones but also small step goals to get there.
  • Don’t be a financial fatalist, and switch to more positive mantras.
  • Get your finances and body in shape. The discipline associated with regular exercising translates to managing your money well.
  • Appreciate what you have now, instead of being a consumerist.
  • Get a Money Buddy. Studies indicate people pick up good habits from friends with similar traits.

8 more ideas

The Golden Rules of Personal Finance
  • Spend less money than you earn
  • Always plan for the future: you should always look forward beyond the current month
  • Make your mon...
2 Basic Rules Of Financial Decisions
  1. Carefully evaluate any financial decisions you plan to make.
  2. Ask for advice before finalizing your choices. Seek out people and sources you trust to help you.
5 personal-finance tips for young people
  1. Start saving early to have a good start on building retirement savings before beginning a family and career.
  2. Understand that credit cards are not a safe net, using it may lead to debt.
  3. Buying life insurance when you’re young ensures you’ll get lower premiums and potentially avoid costs if it has a grandfathering clause.
  4. The cost of buying a car might mean you’ll have to delay buying a house.  Look at your budget carefully and test drive additional payments for 6 months if you think you can do both.
  5. Plan how to avoid impulse spending to avoid debt and distress. Set a waiting period proportional to the price of what you want to buy. Anything worth having is worth waiting for.