Making more money than you spend is not enough to guarantee a healthy financial life in today’s increasingly complex and interconnected world. Nor is making a sizeable income. It’s more important that consumers gain a solid understanding of what to do with their money—which can be daunting when there are so many options available.
How much should you be saving? Should you invest? Where is your disposable income going? Is your debt under control? Which debts should you focus on paying off first? These are just a sampling of the questions that can keep people up at night wondering how to best approach their finances.
Financial literacy is basically the knowledge that is necessary to make responsible financial decisions. As Investopedia writes, “Financial literacy includes understanding how a checking account works, what using a credit card really means, and how to avoid debt.” It includes understanding everything from day-to-day expenditures to investing and debt management.
Are you interested in boosting your financial literacy? Consider these six tips for doing so.
Find Media That Works for You
Some people are visual learners. Others prefer the written word. The key here is to find a form of media that captures your attention, whether it’s a video series on YouTube or a book from the library. There’s no one-size-fits-all way to study up on the concepts that make up overall financial literacy. If one method isn’t engaging you, switch it up until you find a learning style that clicks.
Don’t Be Afraid to Ask Questions
One of the most daunting hurdles to financial literacy is a fear of asking questions. But nobody is born knowing everything there is to know about finances. There’s a wealth of knowledge out there for consumers willing to ask questions. For example, customer service representatives at financial institutions like investment firms and banks can often offer digestible and helpful explanations regarding their services.
Take Advice from Industry Leaders
Thought leaders have earned their status for good reason. Keeping an eye on industry leaders within the financial world is a great way to glean tips, tricks and all-around applicable advice. For example, Andrew Housser, the co-CEO of Freedom Debt Relief, provided eight simple tips for saving last holiday season—a challenging period of time for many consumers hoping to save and buy gifts or travel.
Long story short: There’s savvy, free financial advice all around. Keeping tabs on industry leaders is the best way to make sure you don’t miss a thing.
Practice Tracking Your Own Spending
Sometimes the best way to get good at something is simply by jumping in and doing it. So, use your own budget as a practice ground for improving your financial literacy. Chances are, some expenditures or habits have been slipping through the cracks. By taking note of your patterns, you can work to bring them more in line with your overarching savings goals.
Pay Attention to Fine Print
Failure to read the fine print, especially on credit card applications, can result in serious consequences. For example, 0 percent APR credit cards rarely stay that way; at some point, the interest rate will jump, likely above 15 percent. Before agreeing to any terms or signing on the dotted line, take ample time to actually read the fine print. This will help improve your financial literacy by letting you know what to expect and save you from unexpected complications.
Read At Least One Article Per Day
We’re all busy. Financial literacy won’t happen overnight. It’s much better—and less stressful—to set a realistic goal like reading one article per day. Carve out 15 minutes in your day to sit down and learn about a single financial topic. Committing to this ritual will help in the long-term without derailing your day-to-day plans.
These six tips aim to help you boost your overall financial literacy.