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Are you Financially Literate? What are the steps or guides you can do to become financial literate? Let us know by considering a guide from a trusted site, Investopedia:
How I become financial literate?
Learning to become a financial literate is not that hard at all, you can start the basics and you can work your way up. You can start to save, plan budget for your monthly expenses these are the basic steps you can take to learn financial literacy. With those fundamental skills you learned you are ready to proceed deeper in financial literacy, you will start to get the grasp the idea of interest, tracking your expenses more frequently and better managing of you finances. Therefore, if you learned these skills, you can eventually solve financial problems in the future and set up your future plans and life altogether. Now becoming a financial literate is beneficial to you and your life, it poses great impact to your life, also your decision-making skills will improve better, being able to analyze and determine solutions and strategies to make your financial journey to be more stable in the future. To be a in financial literacy, all you need to do is keep practicing these skills, improve them and utilize them in any situation you face. Always remember to analyze first and determine before making any serious decision especially if it’s related to your financial status.
Create a Budget – Monitoring your expenses according to your income is a must. Having a discipline in money is one of the important things to consider becoming financial literate. Budgeting is one of the hardest things we can encounter daily but it is a must if you wanted to earn more money and avoid debts.
Pay Yourself First – This reverse budgeting strategy might help you to discipline yourself when spending money. It can give you focus in choosing the most important needs rather than expensive wants. Having discipline and setting a main goal in saving money can help in its growth.
Pay Bills Promptly – Making sure that bigger expenses is for important things only. Avoiding inappropriate expenses is helpful in saving money. Especially when cutting off the unnecessary expenses.
Get Your Credit Report – Everyone can request a credit report at least once a year. With this in mind, you can train yourself in making right decisions for saving money. By having a daily expenses record, it is much easier to determine the proper ways of spending and saving.
Manage Debt – Managing your expenses can prevent you having debts. It is important to stop considering debts as helpful for you. Always keep in mind that debts might help you for a certain time, but it is double of the problem.
Invest in Your Future – When learning about financial literacy, you will also learn how to prepare for your future, by making good decisions and plans it can set you up secure for your future. Retirement plans and account is one way to do this, it is good to open retirement account. It is also advisable to ask help from a financial advisor so you can understand and make better decision on how to do this thing.
Want more information? Visit https://www.investopedia.com/terms/f/financial-literacy.asp
According to annuity organization, here are some guides and steps we can follow to become financially literate:
How to manage your money
Now that you earn your own money, it is a priority to manage them as well. Financial advisors tell us to manage our money, learn the basics of budgeting and tracking your expenses for a time period. Making a budget plan is one way of managing your money, knowing where your money should go first and what to prioritize is vital on managing your finances. Managing finances will require a lot of attention from you, because you will constantly check your expenses, your credit cards, and accounts, also reducing what you spend on and rather prioritizing your bills and daily needs. Now that you know how to manage your money, it will get easier as long as you track and wary on how you spend your earnings. Managing your money is a great skill and not many can learn this easily because they just can’t resist spending their money on the things they want.
Start tracking your monthly expenses
This is the first thing you will do once you earn you money. Track every spend you do and list them. This will be your foundation when making a budget, you can try to list for a month on what you spend on. Now if you’re not used to do this, there are mobile applications that you can use to make it easier for you to track every money you spend.
Identify fixed and variable expenses
Now after you are finished in listing every spending you did in a month or longer. It is time to break it down and determine what is fixed and variable expenses for you. Fixed means the price are not changing, like for example your rent, loan payments and such. Variable expenses refer to things that changes their price time to time, like your basic needs, groceries, supplies, and personal things you need. If you already figured that out, it is time to break it down and decide what to prioritize and what to pay first. It is up to you how you do this part; it is different for every individual; you can implement any strategy or plans you can to make your budget much better.
Add up the totals
After a certain period of time, you can now add everything you spent on. This will help you determine your budget and how you will spend your money depending on what things you spend on. Then you can start to categorize your spending depending on if it’s a fixed expenses or variable expenses. Deciding where to spend your earnings is a sign of good decision-making skills that will also help you in future problems you may encounter.
Study your variable expenses
Variable expenses are the things that changes their price from time to time, like groceries, supplies, and personal things you need. After listing every spending you did and adding them all up. You will analyze and study your variable expenses. These expenses are what you most spend on. Now after determining them all, it is time to cut off some of them down, especially if it doesn’t really benefit you and you can live without it, you need to cut it off. This is where your decision starts, making hard decisions and dropping the things you want for a better budget.
Factors in saving
While you earn and spend money, it is also important to learn how to save some money. A part of budgeting is you must always set aside some money first. Take that money and put it in an emergency account that you can use at some point. Now saving is habit that we learn early in our lives, it is advisable to practice this skill because you will use to for the rest of your life. Saving also saves you from unexpected situations that arise before you, because you have a emergency account, it means you have a extra set amount of money to spend on.
Now set your budget
After doing and learning from the previous steps, it is time to set your own budget that fits your earnings accordingly. Now that you separated your fixed and variable expenses you can start to set your budget. With your budget set, you can track and manage your expenses for a time period much easier and better.
Want more information? Visit: https://www.annuity.org/financialliteracy/?fbclid=IwAR0zAWZIE4Xua8fIRmUIzXDfi6rNbPKhBJ7t0rn-easoGDehLdzSPeo2Au4
