Financial literacy: why it’s important

Financial literacy, which has become quite a byword in today’s financially-driven milieu, is about learning how to manage funds prudently. Managing your finances is a lifetime journey and the fundamentals can differ from individual to individual. However, there are several rudimentary skills that can increase anyone’s financial knowledge. One of the ways where you could effectively implement your skills is trading.

Financial literacy is vital because life is full of unexpected events that can cost you dearly. Emergencies and unforeseen expenses may also emerge, and you will also get to see fun opportunities that you simply won’t be able to resist. As you enter your twilight years, the things you long are likely to be costlier and bigger investments — buying a house, rearing children, for example.

So, to effectively plan out these eventualities, you need to have sound knowledge of managing your finances—hence the importance of financial literacy.

So, here are some of the simple but powerful ways to start boosting your financial literacy.

Get to know your spending habits

If you really want to learn more about financial management, the foremost thing is to get familiar with your spending habits. In the age of bank cards, in particular, most of us spend our funds without essentially appreciating how much we’re spending and what we’re spending it on. Keep track of how much you are spending a month on eating out, and how much goes into fuel and transportation, etc. Once you know how much you’re currently spending, you can start to evaluate what needs to be adjusted and what expenses need trimming.

Make a budget

If you are serious about spending judiciously, and want to cut back on your mounting expenses, then you must make a budget. A budget – in case you are not aware – is an estimated amount of income and outlays for a certain period of time. So, for instance, a monthly budget is a structured list of inbound or outbound expenses for the duration of that month.

Save as much as you can

You would be a fool not to set aside a portion of your income for the rainy day. It’s critical to build up a nice little nest egg in case you fall on hard times, as emergencies can occur at any time. While how much you save depends upon your financial situation and salary, the thumb rule is that you should set aside at least 20% of your income.

Secure yourself against internet crime

Protecting yourself against bank account hacking and identity theft has never been more important than now, since most of the banking is conducted online in this digital world. And you can ensure this protection by:

1. Updating your passwords frequently;

2. Never providing personal information online or over the phone unless you are sure you are dealing with a credible individual;

3. Reviewing your credit frequently;

4. Establishing scam alerts or account checks with special bureaus;

5. Employing an identity theft security service.

Consult a financial advisor

Just as you go to the doctor for the treatment of a mental or physical illness, you must seek the services of a financial advisor if you feel overwhelmed about money. Or you can also speak with a reliable friend or family member about matters related to your finances. But it’s imperative to seek professional advice as taking your financial matters for granted would not serve you any better.

Gain some additional insight

Even if you’re very good with spending money, you may still need some professional advice on saving more and investing productively, for which you may take advantage of many financial experts out there. And, in addition to merely trimming your expenses, if your vision is to get extra income, then online trading is a viable solution. There’s a slew of online trading platforms, including Binomo, that let you trade without additional cost and hassle of speaking to a broker. But there’s a caveat: operations with OTC financial instruments are associated with significant risks, so you should conduct deep research before investing in such platforms.

Be target-oriented

Achieving something in life becomes a lot easier when you are driven by objectives; therefore, it’s important to set goals and be target-oriented. So, whether you’re planning on saving up for your dream vacation, looking to buy a new home or even a brand-new car, you should have an inclination to effectively manage your expenses and a plan to follow through.