CandleFocus Glossary Editor
Financial literacy is the ability to understand, manage and make effective financial decisions in order to make the best use of available resources. Ensuring that you have the necessary information to make sound financial decisions is essential for long-term financial security. Financial literacy enables you to plan in advance for short and long-term goals, from saving for retirement to building a budget and balancing expenses.
One of the most important aspects of financial literacy is developing a budget and tracking expenses. Knowing how much money comes in each month, where it goes, and what needs to come out of it, is the key to financial wellness. Knowing your basic expenses (rent, groceries, bills, etc.) and tracking any additional, non-negotiable expenses (credit card payments and other debts) will help you become financially literate, by helping you to create a better financial future.
Learning the basics of borrowing and debt repayment is also important. Borrowing money should always be done responsibly and on an as-needed basis. Understanding the interest one will be charged on a loan or credit card and the impact that carries, is essential to financial literacy. Debt repayment is even more important, as paying off loans in a timely manner can save one money in the long term.
Creating and following a savings plan is another cornerstone of financial literacy. Most people will live on a combined income of Social Security and other retirement benefits. Setting aside money and investing it properly is essential for long-term financial security. A savings plan is a way for one to save money for investments, retirement, and other long-term goals.
Furthermore, staying informed of the latest financial news, developments and trends can enable you to be prepared for any surprises that the market might send your way. Reading reliable financial content and subscribing to a few financial or business related podcasts or publications can help with this. Additionally, talking to a financial professional regularly can help one stay informed as well.
Developing financial literacy is an ongoing process, and it takes time to learn the tools and develop a plan for financial success. That’s why it’s important to start planning as soon as possible. Having the right information can help you develop a budget and make sound financial decisions in the long-term. And that’s why financial literacy is so important. By understanding the components of financial literacy, one can plan for their future and ensure they are taking the steps necessary to secure financial wellness.
One of the most important aspects of financial literacy is developing a budget and tracking expenses. Knowing how much money comes in each month, where it goes, and what needs to come out of it, is the key to financial wellness. Knowing your basic expenses (rent, groceries, bills, etc.) and tracking any additional, non-negotiable expenses (credit card payments and other debts) will help you become financially literate, by helping you to create a better financial future.
Learning the basics of borrowing and debt repayment is also important. Borrowing money should always be done responsibly and on an as-needed basis. Understanding the interest one will be charged on a loan or credit card and the impact that carries, is essential to financial literacy. Debt repayment is even more important, as paying off loans in a timely manner can save one money in the long term.
Creating and following a savings plan is another cornerstone of financial literacy. Most people will live on a combined income of Social Security and other retirement benefits. Setting aside money and investing it properly is essential for long-term financial security. A savings plan is a way for one to save money for investments, retirement, and other long-term goals.
Furthermore, staying informed of the latest financial news, developments and trends can enable you to be prepared for any surprises that the market might send your way. Reading reliable financial content and subscribing to a few financial or business related podcasts or publications can help with this. Additionally, talking to a financial professional regularly can help one stay informed as well.
Developing financial literacy is an ongoing process, and it takes time to learn the tools and develop a plan for financial success. That’s why it’s important to start planning as soon as possible. Having the right information can help you develop a budget and make sound financial decisions in the long-term. And that’s why financial literacy is so important. By understanding the components of financial literacy, one can plan for their future and ensure they are taking the steps necessary to secure financial wellness.