A Key to Success: Determining the Key Components of Financial Literacy

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Is there something you really want to achieve? Is it your dream when you were a child? Or something you want to improve in yourself? Do you follow any guides or strategies? What are the steps or processes you do to achieve your dreams? Is it hard to follow? Or you already have an enough patience and discipline?  Are you willing to take a risk just to achieve your dreams? After learning the different Financial Literacy definitions, we can now proceed on determining the key components of Financial Literacy.

Choice Wealth is a company that offers a guide on planning your future. They cover topics about finances and even Financial Literacy. They provide a people-first service to their clients. Also, they make sure to effectively give you an advice that will help you to manage your financial life. According to Choice Wealth, there are three (3) components of Financial Literacy: An up-to-date budget, Dedicated Savings (and Savings to spend), and ID Theft Prevention. These three are needed to successfully maintain and manage your financial life. Knowing and understanding Financial Literacy is not enough to become financially literate and be successful in life. You also need to understand the consider learning this three components. Without these three, it is hard to make a wise financial decisions. So taking these advantages can help you to become financially literate and be successful in life. Let’s start defining these three and I will provide examples for you to understand well the topics. An up-to-date budget refers to creating budget or spending plan. They compare the word “Budget” to “Diet” because it has a same mission in your life. It is to help you to balance your financial life and avoid overspending your money that might affect your finances. It doesn’t need to be complicated in budgeting. Besides from having patience and discipline, organizing your spending plan might also help you.  Also, there are apps or mobile applications that you can use to organize your budget. This will be helpful for those people who are busy and don’t have time to organize their money. Next is Dedicated Savings (and saving to spend). It is putting your savings into two categories: Saving for future and saving for spending. Saving for future is when you wanted to quit on your job and still able to provide for your needs and wants. That even unexpected things happen is you are still able to manage it. Also, considering a constant change in your plans are signs of being prepared and responsible. It is like you are prepared for every changes that might affect your finances. While saving for spending is your daily or monthly expenses. It is to determine your bills or things that are needed to be pay. Categorizing your money can help you to be more prepared in the constant change that might happen. Also, you can be more responsible in spending your money since you know when your money should go. Lastly, ID Theft Prevention. It refers to the prevention of scams and any crime that is related to money. By having an enough knowledge to protect yourself and your money is a privilege to live in a peaceful place. It is advisable to use personal identity more than paper documents. Because a paper document is much easier to duplicate rather than your personal identity like your thumb mark. When you don’t have any plan to take money from your credit card, it is much better to freeze it for a while. It is to let your bank know that you will not use your money from your credit card for a certain time. Having these three components will help you to balance your financial life. It prevent you to experience financial issues and stress, and will help you achieve your financial goals.

Scripbox used science, data, and technology to help people to enhance and improve their wealth management. They provide a great work with kindness, they also make sure to thrive for the trust of their clients or customers. It is to lessen the worries of their clients or customers about financial stress or problems. They also provide proof and evidences that shows their trustworthiness. Their knowledge, skills, and experience lead them to success. And that success is being shared to people. According to scripbox, there are four (4) components of financial literacy: Budgeting, Debt, Saving, and Investing. Budgeting is a process of organizing your money into categories. Having a budgeting skill is essential in financial literacy, because you need to know how to manage your money. It will also help you in planning for short and long term financial issues. Budgeting is vital for security and independence. Next is Debt. Debt is a form of borrowing money. It is usually seen as negative aspect, but in other way it can be in a positive aspect. It can be a good debt if you only borrow money for things that are necessary for a living. Also, if you risk to borrow on something that will soon give you income like businesses, trade, etc. It is considered as bad debt if you only borrow money for unnecessary things or expenses like luxury, gambling, and even expensive clothes, etc. Being able to differentiate necessary and unnecessary expenses will be helpful to an individual to lessen their chances of heavy debt. Then, saving is the third component. Being able to save money is big a help to an individual especially in their future. Change is constant, we must be prepare for sudden changes that might affect our financial life. Having a better financial life in the present is also having a successful financial goals in the future. Saving is one of the important things we need to do to secure our financial success. Lastly, investing. Investing for an institution is one way to improve your financial life. It is risky but if you take care of it, it will surely secure your future. Also, it can give you an opportunity to achieve your financial goals. Therefore, being financially literate is having an enough knowledge and skills about these components. We must try to follow this tips for us to expand our experience about our financial life.

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