If you want to improve your personal financial habits, it is advised that you start with becoming better educated on the topic and then do some research on what changes can be made. The following are some tips for improving your financial literacy:
1) Spend less than you earn. This one should be simple enough, but it is easier said than done. An easy way to make sure that you are living within your means is by keeping track of your expenses and income in a notebook or spreadsheet and making sure they balance out each month.
2) Save money each month. It is important to set money aside for unexpected expenses as well as things you may want or need but can’t necessarily afford. Setting aside money each month will help you develop a savings account that can be tapped into in order to meet these costs if they arise.
3) Be on the lookout for opportunities to save. Take time to research all of your options before making any big purchases (cars, major appliances, etc.) and see which retailers are offering the best deals on them. When shopping, try not to buy on impulse and ask yourself if there might be a better deal elsewhere before purchasing something.
4) Pay your bills on time each month. This will allow you to keep a good credit score which will come in handy down the road. If you decide that you are unable to pay a bill on time, call the company and ask for an extension.
5) Avoid going into debt when possible. Going into debt can be very easy when it comes to buying things on credit cards, especially if you are living beyond your means. If you have to go into debt because of an emergency situation (home repairs, unexpected car bills), make sure that these expenses are paid off as soon as possible.
6) Set aside money for unforeseen expenses (i.e., job loss). If you find yourself in the situation where you have to suddenly change jobs, or your hours end and you need to look for another job, make sure that you have enough money saved up to cover your expenses for at least the next six months.
7) Know how much money you have available in savings. Don’t live below your means and don’t expect financial security by living beyond them. Know what is available to use for unexpected expenses and know how much you have saved in a savings account that can be accessed when needed.
8) Know what loans are available to pay off debts (i.e., car payments, student loans, etc.). If you are having trouble paying off loans, or your bank account doesn’t have enough for your monthly bills, make sure that you know which one will give you the best deal.
9) Know how to safeguard your money from online fraud. Fraudulent websites can be everywhere on the internet and also through email. If someone asks you to send money to them, or for you to wire money overseas, it is best to know that these websites are fraudulent and avoid doing business with them.
10) Become financially literate at work. If there are any questions about taxes or financial figures that are relevant in your job field, don’t hesitate to ask your boss for help. With her/his expertise, you will be better prepared to work with these figures and understand them.
If you are consistently being overwhelmed with debt or having trouble paying your bills each month, it may be time to seek some professional help. In addition to finances, personal credit management and planning for the future are also good topics for exploration. It may be helpful to attend a financial literacy class with like-minded individuals or seek out financial advice from friends and associates who may have a sound knowledge of managing their money.
Financial terms and their meanings:
Fiscal policy: This is when a government decides how much it will spend on various projects and/or how much it will collect in taxes.
Financial literacy: This is the understanding of financial terms and issues. Financial literacy is a vital tool for anyone who wants to properly manage their finances.
Debit card: This card allows you to pay for transactions by immediately decreasing your balance in your bank account.
Credit card: Like debit cards, these can be used for purchases, but unlike debit cards, they are not linked to checking accounts and they allow you to build up a credit history.
Savings account: This account usually gives you higher interest rates than other types of deposit accounts. Also, be sure to only keep the funds in this account for a short period of time so you have a record when you withdrawal them. (e.g., three months)
Direct deposit: This is where your pay is directly deposited into a current account rather than being manually transferred from your employer’s bank.
Emergency savings fund: An emergency savings fund can help you get through the lean periods between pay days, or pay for unexpected expenses such as car repairs or medical bills.
Credit Score: This is a number used to determine how creditworthy you are by rating your ability and willingness to repay debts on time and with interest rates.
Investment management: This is the act of investing in stocks, bonds, mutual funds or real estate with the goal to make money.
Other ways to improve your financial understanding
There are many online courses and resources available to help you gain a better understanding of your finances.
Here is a list of some useful websites:
Financial literacy is an ongoing activity that can be positively done in every day and everywhere life leads us.
We can find many opportunities to learn or teach finances: from the bank, from friends or in the workplace.
As a quick review, here are some reminders about how we can improve our money management skills.
In the end, it all depends on who is managing our money for us. If you are managing your money yourself, you will be better prepared to make sound financial decisions. However, if someone else is handling your finances (i.e. your spouse, a family member or your employer), you should ask them some questions about the way that they control your money.
Financial management is a continuing process that everyone can benefit from doing. There are many ways to improve our financial understanding and build good financial management skills.
This does not aim to provide an exhaustive review of all the available resources for improving one’s financial literacy. Just a brief overview of the most effective online resources for learning more about finances and how to manage them better.