The Importance of Financial Literacy: Tips and Tricks for Growing Your Financial Knowledge 💪

What exactly is ‘Financial Literacy’ and how does it work?

In simple terms, financial literacy is how educated you are about finance in terms of personal finance, money management and investing. 

Did you know a financially literate person finds it relatively easy to navigate the world in terms of building their own future?

Yes, that’s correct! It’s a valuable skill that makes you long-term oriented as you continue to learn, all because you’re constantly saving, investing, planning for your retirement, your children’s education and wedding, future settlement, and other lifelong financial goals.

How can you do that exactly? Well - it’s not that hard. You just have to be relentlessly following books, podcasts and newsletters, enroll in courses on investing (available on Investor’s Lounge), learn how to read a stock report, how to do a trade analysis and join communities or groups on personal finance.

We also wrote an article way back on 15+ resources on finance, you can read the whole thing here.

But think about it - when you’re close to graduation, you succumb to chasing the ‘big company’ that could give you your ‘dream job’. You start applying to internships and job opportunities day and night, gazing at your inbox, scrolling through rejection emails, waiting for the moment you get an acceptance from somewhere to save up for your ‘dream car’, ‘dream travel destination’.

And no, there’s nothing wrong with having these dreams! But what you need to plan in advance is the breakdown of the financial goals you align for each of those dreams.

Do you need Rs. 3lac for that travel plan of yours?

Let’s start with some basic questions:

• How are you going to get there?
• How much do you earn now?
• How much do you have in savings?
• How much money are you investing and out of that investment bucket of yours, what % will you be using on this trip if you had to sell some of your assets?

Most people are genuinely stuck in that vicious spiral, but Now what’s next? 🤨

Unfortunately, this might be where you get stuck. Most probably you’re now trapped in the cycle of living pay-check to pay-check, with a 5% yearly raise at max, and living day and night trying to chase numbers and targets. 

(Hence why people are growing more aware of stepping away from the 9-5 loop).

The only way you grow out of it and live a truly financially independent life is to embark on the journey of being financially literate that allows you to learn where to invest, how to budget, how to save, create diverse income streams, and plan for your future.

But, Why is being financially literate so important now?

You can notice the growing importance of financial literacy in the past 5-10 years or so - if not more. However, if you’re living under a rock, allow us to give a reality check of the world we live in currently!

Have you come across or experienced:

• Mass layoffs
• Rise in the cost of education
• Increasing investment options
• Expensive housing markets globally 

…and that’s not all sadly :(

You can also see the rise in the costs of basic utilities in Pakistan and the depreciation of the PKR currency, making it increasingly difficult to live your current lifestyle. This is where the concept of financial literacy, particularly investing, comes in. 

As stressful as it sounds, you’re in a constant race against inflation throughout your life. If the rate of inflation exceeds your income growth, you’re losing your purchasing power. 

And if you do nothing about it, the gap will grow greater over time.

Financial Literacy in Universities and Colleges 

Unfortunately, when it comes to real-life finances such as buying a house, getting your taxes done, or something as simple as setting a budget, universities and colleges aren’t your best sources for learning. However, that doesn’t mean you won’t learn anything as a college student.

If you’re still in university, try to partake in as many voluntary activities and societies wherever you can - try to specifically work in the finance team for a few projects so you know the basic know-how of how budgets and expenditure tracking work.

You might think: “But what finance team? What project? Where do I find it?”

We’ve got an idea! Your friends at Investor’s Lounge and Investing at 25 have got your back!

Most of you love hosting dinner parties, iftar parties, dholkis, bridal showers, local meetups, right? Why don’t you partake in the behind-the-scenes of the budgets? Understand how much the costs are? How can you save more and budget better? Have a great event that costs less than you anticipated.

Let us know when you host your next event with this mindset and if it changes the way and your actual total spend on the event as well! 

Other than that, try to be aware if your college is conducting any simulation, competition, or keynote sessions about financial literacy. This might be the best shot at kick starting your journey to financial freedom since you can interact with renowned people who have done this stuff before.

Overall, the common denominator between all these tips is to stay proactive. As we said, unfortunately, no one will come knocking on your door to teach you about financial literacy in college, so be ready to take the first step yourself! 

I want to start my journey to financial literacy - how do I do it?

If you’ve read everything till here, it’s safe to say you’re pretty serious about jumpstarting your journey to financial freedom. Now, the first step is to find credible resources to learn from. 

In this modern age, it’s easy to be bombarded with knowledge from millions of gurus scattered throughout the internet, so it’s normal to be confused.

That’s why we partnered up with InvestorsLounge.com to give you an all-in-one financial education platform where you’ll have access to:

✅ Investing Courses

✅ Practice Simulators

✅ Competition Prizes (up to PKR 1 Million)

✅ Market Research (50,000+ Reports)

✅ Analyst Recommendations (1000+)

✅ Technical Signals (5000+)

✅ Market Dashboards (10+)

✅ Broadcast List Access (on Whatsapp)

…and so much more. You can click here to avail your first 45 days off by using the code IA25 and get immediate access to their premium portal!

If you’re still not ready to spend an amount on a course, you can still follow Investing at 25, where we break down top financial concepts into simpler posts. Here’s an example of how we explained what mutual funds are by taking pizza toppings as an example. 🍕👀

You can also view our previous 30+ articles on different financial and mindset-based topics here. 

Good luck with your journey! 💰♥️

Disclaimer: This is not financial advice, please do your own research! This content shared by Investing at 25 and Investors Lounge is purely for educational purposes and to educate young adults in Pakistan.