Financial literacy: Sharpen these skills to become a Financially literate person
Keystone Center for Innovation & Teacher Education
Enabling Educator Communities for Innovation & Impact
Financial literacy is the ability to apply various skills to understand key financial concepts such as earning money, saving, investing, and managing financial challenges. In today’s fast-paced world, financial knowledge is essential, especially as more people are earning money and seeking stability for a secure financial future. But what skills are needed to become financially literate? This blog post elaborates about the essential skills required to achieve financial literacy.
When someone is searching for a job, the first thing that typically comes to mind is identifying the skills needed for the role and then acquiring those skills through training. In a similar way, becoming financially literate requires understanding a few key fundamentals and equipping yourself with the necessary knowledge to manage your finances effectively. Financial literacy is often understood as just about earning and spending money, but on a broader scale, it includes many financial aspects like investing, growing wealth, understanding financial markets, and dealing with financial difficulties. While these areas are crucial, there are a few key financial skills that can help you maintain a healthy financial life. This blog will highlight those necessary skills and guide you in managing your financial matters more effectively.
5 Essential Financial Literacy Skills to Master
1.Stick to Your Budget
One of the most important financial skills is learning how to create and stick to a budget. A budget is your financial roadmap; it helps you track where your money is going and ensures you don’t overspend. Whether it's a simple spreadsheet or a more detailed app, keeping your expenses in check is the first step toward building a sustainable financial plan.
As a practice, Start planning your budget weekly once. Design a weekly planner and mention the money you have and the expenses in two different columns. This practice helps you to cut down a lot of impulsive spending and over spending.
2. Savings as a first priority.
When you prioritize saving over spending, you ensure that you are building a financial cushion before addressing your wants. By putting savings first, you create a habit of financial discipline, setting aside money for future needs, emergencies, or opportunities. This approach helps you avoid impulsive spending and keeps your financial goals on track, providing long-term stability and security.
According to the Consumer Financial Protection Bureau (CFPB) report, which examines saving behaviors, 40% of adults do not have enough savings to cover an unexpected expense without borrowing or selling something. As the statistics highlight the pressing need of savings from an early age.
3. Always Prioritize Needs Over Greed
It’s tempting to indulge in things we want, but a stable and a secure financial life comes from learning how to prioritize needs over greed.
The key to developing this mindset is to have a Need list before spending the money you have. This will help you to nurture a habit of thinking about the needs before spending and eventually leads to cutting down the unnecessary and impulsive expenditure.
4. Compare and Purchase to Save Better
The online markets or offline markets, they are luring the consumers with discounts on their products. Smart consumers don’t just buy the first thing they see; they compare prices and options to get the best deal.
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Whether it’s shopping for groceries, gadgets, or big-ticket items like insurance or cars, taking the time to compare options helps save money in the long run. Make comparison shopping a habit, and you’ll see the cumulative effect on your savings. Yes, comparison does take time but it will help you save a lot of money in the long run.
For Example, whenever you are buying any product online you can always cross check the price of the product on other websites before buying. There are a few websites that helps you in this comparison and to reduce the unnecessary time, those websites are really worthy to use.
According to the reports, 59% of consumers use their phones or tablets in-store to compare products and prices before making a purchase. This highlights how comparison shopping allows individuals to make more informed decisions and secure better deals, saving money in the long run.
5.Focus on Growing Your Wealth
This reminds us of what Investor, Warren Buffet said, “If you don't find a way to make money while you sleep, you will work until you die.”
Finally, while saving is important, growing your wealth is essential for long-term stability. Investing in stocks, mutual funds, or real estate can help your money work for you. Learning about different investment options and staying informed about market trends allows you to make decisions that will increase your financial future, ensuring you don't just save but multiply your resources over time.
On a closing note Whether you're just starting out on your financial journey or looking to refine your existing approach, the key to financial well-being lies in planning your budget and ensuring that you are sticking to the same. No matter how much you earn or have in your bank account, the first step in planning a budget is evaluating your needs and wants. Then develop a mindset of growing the limited financial resources you have by understanding the financial markets over time. This assessment is essential for managing your finances over any period of time. All these skills will play a very impactful role in the future to lead a secure life.
The information on Financial literacy is scattered everywhere on the internet which makes it difficult for the people to learn and acquire the knowledge of Financial education. Are you looking for a well designed and a structured program on Financial literacy? KCITE has a structured Financial literacy program to develop the learners into Financially literate individuals.
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