Financial literacy is not something everyone is taught before they leave school. Or ever. Basically, it’s one of those all-too important pillars of successful “adulting”.
Making wise financial decisions has a huge impact on your future, your pocket and your mental health! With a little financial wisdom, you can aim to successfully save money, budget and invest smarter, and live better.
Here are a few key concepts to help you become more financially savvy:
Creating and maintaining a budget is one of the most basic aspects of staying on top of your finances. In this modern day, it’s easier than ever to create a budget with the availability of free websites and apps that help with budgeting, tracking your spending, saving, transaction history, inter-account transfers and many other benefits for first-time or mature banking clients.
It doesn’t matter if math isn’t your strong suit – thanks to these user-friendly tools, everyone can get help with keeping their finances on track. And, when used properly, they’ll keep you in the know about where your money is actually going.
Without following a budget, it’s difficult to hold yourself accountable on where your money is coming from and where it’s going. So mastering the basics of budgeting is where any financial novice should begin.
It’s important to understand interest and the impact it can have on your financial life.
. The best way to reduce the interest you pay is to always make your payments on time. Overdrawn accounts carry interest penalties. The sooner you pay off your loan, the less interest you pay.
Shop around and compare the interest rates that different banks charge before making a decision. See if they’ll fix the interest rate you’re charged. This means your repayments will stay the same and won’t increase if the interest rate increases.
Understanding the ins and outs of interest can impact your finances more than you realise, so it’s an important concept to gain a better understand of early on in life.
- Staying Savvy by Saving
Obviously, saving is an important aspect of maintaining a healthy financial situation. It’s easy to ignore things like retirement since it seems so far off in the future. Learning to save early on can help you gain the knowledge, practice and set of skills you’ll need throughout your adult life. Beginners can start working on this concept in the simplest sense, like saving money for something you want, like a laptop or new phone.
Working toward a goal is key here; know what you are saving for and track all your expenses. Also, choose a bank with the right products and services to make saving easy.
- The Credit-Debt Roller-coaster
Maybe roller-coaster isn’t the right term – perhaps, downward spiral is more accurate. Meaning: it’s much easier to lose credit than gain it. Credit can be an extremely useful tool – if it’s managed correctly. Making rash decisions when you’re young can end up costing you throughout adulthood; so it’s important to grasp the concepts behind responsible credit practices as early on as possible.
- Identity Theft Issues & Safety
In this modern day and age, identity theft is more prevalent than ever. Since everything is digital and just about everyone has shopped online at one point or another, your financial information is more vulnerable to fraud. Understanding this concept, along with preventative measures, like password protection and limiting the amount of information shared online can be the key to maintaining safe accounts or, inversely, can lead to financial ruin. While it’s not a fool proof science (people can be safe and things do still happen) it’s important to safeguard your finances as best as possible to avoid the threats that exist.
Credit: This article edited from original fastweb.com