Back to Basics: Fundamental Money Skills (2024)

FAQs

What is the fundamental of money? ›

It is about having the confidence and financial skills to make informed decisions about money. It is about your financial well-being.

The Bottom Line

Listening to podcasts and reading books about specific areas of finance that interest you help break down more complex financial topics and speed up the learning process. There are also many paid and free courses out there that offer courses in different areas of finance and investing.

What is Financial Literacy? Financial literacy is the cognitive understanding of financial components and skills such as budgeting, investing, borrowing, taxation, and personal financial management. The absence of such skills is referred to as being financially illiterate.

Personal finance basics include budgeting, saving, investing, managing debt, and understanding credit. Budgeting involves tracking income and expenses, setting financial goals, and making informed spending decisions. Saving is important for emergencies, future goals, and retirement.

Saving, budgeting, investing, and spending your money wisely are fundamental habits that can help build financial discipline. These habits also help you become financially independent and disciplined. However, wealth creation goes beyond these four principles.

Finance can be easy to learn if you are willing to seek out informative content from books, podcasts, videos, blogs, and even professionals and then invest some time soaking up knowledge.

Learning financial concepts can take the average person anywhere between six months and five years. The time it takes to learn finance will depend on different factors such as: prior experience. Degree requirements.

When following the 10-10-80 rule, you take your income and divide it into three parts: 10% goes into your savings, and the other 10% is given away, either as charitable donations or to help others. The remaining 80% is yours to live on, and you can spend it on bills, groceries, Netflix subscriptions, etc.

How do I teach myself financial literacy? ›

The countries with the highest financial literacy rates are Australia, Canada, Denmark, Finland, Germany, Israel, the Netherlands, Norway, Sweden, and the United Kingdom, where about 65 percent or more of adults are financially literate.

Employers value both hard skills and soft skills when hiring candidates. Students completing a co-op placement may also be asked to complete a qualification test to validate their hard skills such as financial literacy.

Key aspects of financial literacy include knowing how to create a budget, plan for retirement, manage debt, and track personal spending. Financial literacy can be obtained through reading books, listening to podcasts, subscribing to financial content, or talking to a financial professional.

To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange.

Money is a medium of exchange; it allows people and businesses to obtain what they need to live and thrive. Bartering was one way that people exchanged goods for other goods before money was created. Like gold and other precious metals, money has worth because for most people it represents something valuable.

The quantity theory of money is a framework to understand price changes in relation to the supply of money in an economy. It argues that an increase in money supply creates inflation and vice versa. The Irving Fisher model is most commonly used to apply the theory.

A medium of exchange that is centralized, generally accepted, recognized, and facilitates transactions of goods and services, is known as money. Money is a medium of exchange for various goods and services in an economy. The money system varies with the governments and countries.