Financial literacy is one of the most important parts of life, and sadly, our education system often fails to provide a good foundation for the people who need it the most. That’s why we’ll be breaking down why financial literacy is so important, and how you can go about improving your own.
What is Financial Literacy?
Financial literacy is the ability of a person to interact with the financial system around us in a way that limits the potential drawbacks of bad financial decisions. While there a multitude of different skills are encompassed in the field of financial literacy, for the average person, there are a few key aspects of financial education you’ll need to know. Chief among them is the ability to budget and manage your personal finances, which helps to build a solid financial footing for the rest of your financial life.
Financial Literacy Leads to Financial Freedom
Financial freedom is the state of owing no debts and having the ability to make your financial decisions without undue influence from outside forces like creditors or potential job loss. For a lot of people, this might seem like a pipe dream. But for those with a good sense of financial literacy, financial freedom is well within their sights.
While getting a handle on your debt, and building up a decent savings account can take a long time and require a lot of hard work, financial literacy can make this process a whole lot easier, and a whole lot more efficient. It can also assist in finding the best possible solutions to your debt problems. At www.FreedomDebtRelief.com for example, there are several options to help you get a handle on your debt.
Financial Literacy Helps You Make Better Decisions
Having a good understanding of commonly used terms like APR or interest can help you make better decisions when getting a loan or otherwise dealing with creditors. Good working knowledge of finances can give you the edge over the average consumer and help keep you out of unmanageable debt.
Another major benefit of financial literacy is the ability to grow your credit score, which can help you get loans for the things you really need, like a home or a car. It can also help you put your money to work for you, giving you the opportunity to increase your overall wealth with smart decisions.
Financial Literacy Helps You Use Your Money, To Make Money
Although a bit more of an advanced concept than budgeting or personal finance, learning about the different investment markets can help improve your ability to grow your personal wealth. For the average person, you’ll want to stay away from investing in individual stocks, but there are still several options for you to look into.
Chief among them is putting aside your extra cash into a tax-advantaged retirement fund. By investing for your retirement early, you can take advantage of compounding interest and other benefits that may come along with it, like potential matches from your employer. Another option for the common man is putting your extra money into a mutual fund from a well-managed company like Vanguard. But where exactly do you go to learn all of this?
How Do I Learn Financial Literacy?
Luckily for the average consumer, there are many resources available both online and in-person for increasing your overall financial literacy. The United State government for example established a commission in 2003 to help consumers navigate through the murky waters of the financial world.
There are also plenty of paid and free online classes to help get your foot in the door. Whichever method you choose, the more you learn about financial literacy, the more you’ll understand why financial literacy is so important.