Financial literacy basically refers to your ability to learn, understand, and apply various financial tools, skills, and decision-making processes in order to make financially wise and quality decisions. You were not born financially smart or dumb; your financial knowledge or ignorance developed over a period of time.
So it effectively means that it is a skill like any other that can be learned and mastered over time if you are willing to learn. Simply put, it involves learning how money works.
Financial literacy empowers you to:
- Help you to be confident to make informed personal financial decisions that create generational wealth.
- Improve your ability to handle day-to-day financial matters
- Help you avoid poor financial decisions that would wreak havoc in your life and take years to overcome
It’s really quite easy if you are patient enough and willing to learn. You’re off to the races once you understand the fundamentals of finance.
How do you gain financial literacy?
Take financial responsibility
To be financially responsible means that you are liable and accountable for your current and future financial well-being and that you endeavor to keep making good financial decisions in your personal finance journey as long as you live.
Thefirststep to improving your finances is to learn to takeresponsibilityfor all your finances. You do not want to be like most people who sit and watch on the sidelines, allowing things to just “play out” however they come, accepting the outcome, and leaving a huge chunk of their financial decisions and future well-being in the hands of government officials, policymakers, bosses, family, friends, or the corporate and commercial industry with their marketing gimmicks.
Doing this would be suicidal, and it is like asking a pilot to fly a plane without any flight plan in mind (I don’t know, with hands in the air, any route will take us there), and somehow you want and expect to arrive at your desired imagined destination. That is nearly impossible because you will never get there.
Learning to master personal finance will empower you. It will help you avoid financial pitfalls, and show you how to take advantage of the financial opportunities that are already available to you. Just do not allow anyone to tell you anything else different
Your own experience
There is no better teacher than your own financial journey, but that doesn’t mean you have to make ALL of the possible mistakes in the world. It is more about using yourself as a case study for using your own personal judgement based on your knowledge, personality, lifestyle, experience, wisdom, and the advice of others, but you will make mistakes along the way, no doubt about it; it is part of the learning process. It is a matter of who you are going to trust and accept advice from, and whose advice you should treat with a grain of salt.
Experience of others
The easiest and quickest way to learn is from the mistakes of others. All you need to do is observe, be curious, make mental notes, and keep your eyes open—be aware. Many people do not do this and instead follow others like sheep because of the bombardment of external influences. This is not necessarily the best way.
If anything else, history has taught us that following the crowd is often not the recommended way to live your life. You are unique; you have your own personality, lifestyle, dreams, goals, desires, needs, and wants, which are fulfilled differently as compared to your peers, so glean from others but stick to your own path.
A classic example is the stock market when a stock is overvalued because so many people have jumped on the bandwagon and bought shares in that particular company because it is the flavor of the month, everyone else is doing it, and it feels like the right thing to do.
It is the people who are inexperienced, have insufficient financial literacy and wisdom, and lack the know-how of the stock market who are caught with their pants down, so to speak, and are prone to make huge mistakes and lose a lot of money. In our world, we call it the get-rich-quick-scheme phenomenon.
Some simple things to do to improve your financial literacy include:
- Read books that discuss money and financial literacy.
- Listen to reliable independent podcasts and other channels on business and the economy.
- Subscribe to finance and business newsletters.
- Use the internet to enroll in a personal finance course to improve your knowledge
- Continue to ask questions from reliable sources about concepts you do not fully understand or search the internet for reliable answers.
I would like to leave you with this final thought, money affects every aspect of your life, so it makes so much sense to take the time to invest, empower, and master financial literacy just so you invest in yourself; instead of giving your power away to some external influencers (so-called experts) who do not have any clue about your needs, wants, lifestyle, your dreams, or your financial goals.
Thank you for gracing us with your presence. Please leave a comment below, and we will gladly respond. If you wish to enroll in our course: Bootcamp: A Beginner’s Guide to Minding and Managing Your Own Money:The Advantage of Knowing How to Make the Right Financial Decision just email [email protected]
