FINANCIAL LITERACY

In recent times, with the advancement of technology, financial products and services have become increasingly widespread throughout society. Financial literacy is the capacity of an individual to possess some set of skills and knowledge that allows them to make informed and effective decisions with all of their financial resources. It is the foundation of your relationship with money, and a lifelong journey of learning.
There are many skills associated under financial literacy, and often require at least an interest in personal finance, basic understanding of key financial concepts, making better financial decisions and manage money better. There are however, certain skills to learn and practice that could develop financial literacy and improve personal finances. They are;
Creating A Budget: This involves tracking how much money you earn and spend in a month. This can be done in an Excel sheet, paper or on a budgeting app. This should include income, fixed expenses, discretionary expenses and savings.
Build Savings: Pay yourself first, this reverse budgeting strategy involves having a savings goal plan, deciding how much to save every month and setting that amount aside before going into your expenses.
Pay Bills Promptly: This involves staying on top of monthly bills, making sure that payments consistently arrive on time, and no bills pile up.
Debt Management: Try using your budget to stay on top of debt by reducing spending and increasing repayment. Develop a debt-reduction plan or probably find a debt-counselling program.
Investing: Consider opening an individual retirement account and create a diversified investment portfolio of stocks, fixed income and commodities. Seek financial advice from professionals and develop strategies to reach your goals.
Becoming financial literate involves learning and practising a variety of skills that relates to budgeting, debt management, understanding credit and investment products. Also understanding concepts such as interest rates, opportunity costs, compound interest, debt management and budgeting, could help an individual manage loans and stop them from amassing dangerous levels of debt and endangering their credit scores.
However, a lack of financial literacy can lead to a number of pitfalls, such as accumulating unsustainable debt burdens which in turn, can lead to poor credit, bankruptcy, housing foreclosure, or other negative consequences. Thus establishing and maintaining healthy financial habits that leads to a financially literate life, can never be overemphasized.