10 Financial Literacy Tips For Beginners.
Starting out on your own is not always easy but being equipped with the right information will help make the journey less stressful, one of the things needed for a smooth transition is money and you need some level of financial literacy to sustain that. Based on investopedia’s definition, financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. It simply means knowing how to manage your everyday finances, it is a very essential tool to have if your goal is to attain success in your endeavours. Here are some financial literacy tips that will help you on your path to financial freedom.
Save up - Open a savings account, set aside a portion of income and finance the account with it. Small portions every month will go a long way at the end of the day. Having savings help you deal in times of emergency, it also gives you some level of confidence to take responsible financial risks that can lead to increased income. Before opening a savings account, ensure that the interest rate is favorable, this way you can get better rewards for saving. Have a savings goal and work towards getting to it every month. How much you put away also depends on your goals. Studies vary on how much you should put into savings a month, but the general rule of thumb is 20% of your income.
Budget - This is one of the very important tools used in getting financial security. Budgeting creates a spending plan for your money and can help ensure there is always enough money to pay for food, bills and other expenses. Having a budget is a good way to avoid going into debt and it promotes saving. A budget helps you figure out your long-term goals and work towards them. It helps you keep track of your progress and brings you closer to your dreams. There are apps that can help you with budgeting but a simple excel sheet can do the trick too. It may sound tiring at first but once you start you will see the benefits. You will get a clear picture of your expenses and pinpoint any loopholes and problems in your everyday spending. You must remember not to obsess so much on following the budget, allow room for flexibility to a reasonable extent.
Research And Educate Yourself - On your journey to financial freedom, it is only right that you keep track of what is going on in the world of finance. Increase your basic knowledge about concepts such as investments, interest rates, currency-cost averaging and the rest. While you are getting acquainted with those terms and how they can affect your money, also look for means to increase your income. Invest in yourself by learning new skills or improving on old ones.
Set Goals - We’ve talked about goals and how it is paramount you set them, especially while trying to maintain or increase your finance. Whether you are saving to pay your house rent or for Detty December groove, setting goals make it easier to accomplish what you have in mind. You’ll be much more inclined to manage your money better if you know what you plan to do with it. So set saving goals, budget goals and other personal goals that can help propel your life forward in general.
Stop Procrastinating - The time is now! Start making those financial changes you’ve been promising to make. Procrastination steals your time, money and ultimately your Joy. The key to ending your financial rat-race can sometimes depend on the right attitude, and that attitude is not procrastination. Start saving today. Start learning and investing today so that tomorrow will thank you.
Establish Credit - Credit score is a numerical rating that measures a person's likelihood to repay a debt. A higher credit score signals that a borrower is lower risk and more likely to make on-time payments. It is good to have a credit line and maintain a good credit score, this will enable you to access great loans and other benefits, but you must be careful not to over rack it, this is also where budgeting and setting goals come in once again. On our Jamborow platform,we use AI and blockchains technology to create a credit check and proprietary credit scoring algorithm, which provides credit footprint to users and gives them data visibility needed for loans.
Adopt A Realistic Lifestyle - Spending on luxuries such as buying designer clothes every week or partying every weekend while slowly eating up your savings isn’t a financially literate decision at all. We are not asking you to stay away from fun completely but you must remember to keep your lifestyle according to your basic earnings.Young people are often impressionable, especially in today’s world of social media, for a beginner looking to be financially stable you must learn to make smart, self-composed image of yourself, look beyond the flashy materials around you and focus on what you have set to achieve.
Invest - Having passive income means you are closer to your financial independence and one way to get passive income is through investments.Your investment enables you to be free and not rely on the money of others or even your own savings in any event of financial hardship. It ensures that you have enough money to pay for your needs and wants for the rest of your life. For a beginner, you need to have a source of income that will enable you to remove some money to use for investment.
Note Your Financial Details - - Keep an accurate account of how your money moves. Write down complete details of your finances. This includes your net worth, how much you have saved, amount you owe in debt and investments made. This will help you have a better understanding of your spending habits, savings patterns and also monitor your investment.
Increase Savings - As your salary or other source of income increases over time, be sure to increase how much you save. Every time you get a bump in pay, the first thing you should do is up your automatic transfer to savings, and increase your retirement contributions.
Stay Healthy - This may seem like an odd tip, but the saying that health is wealth comes to play here. A study showed that more exercise leads to higher pay because you tend to be more productive after you’ve worked up a sweat. So taking up running may help amp up your financial game. Plus, all the habits and discipline associated with, say, running marathons are also associated with managing your money.
The importance of financial literacy can not be overstated. Using the tips given above, you can now take the initiative to self-educate and grow your financial knowledge by beginning with the basics of money management and maturing into a smart spender. Putting time into your financial development improves saving and investing decisions by leveraging resources—like age, talent, money and the ability to establish good habits.