Schools don’t usually teach financial literary. That’s why many people enter the workforce with barely any idea how to make money. All you know is that you need to save. But after years of saving your allowances, loose change, and wages, how come you’re still struggling to live comfortably?
Several factors can affect your financial status. Maybe you’re a breadwinner, or you live independently with a lot of bills to pay. Regardless, only financial literacy can solve all your money problems.
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Whether you’re rich or poor, a rank-and-file employee or a CEO, being financially literate can save you from bad debt, investment scams, and other financial pitfalls. Thankfully, you don’t have to go back to school to understand finance and investments better. Below are four easy steps to becoming financially literate:
1. Learn Different Ways of Saving Money
Aside from using a piggy bank or any other way of keeping your cash, explore other means to save money. One of the more advanced ways people save money is by opening a bank account. There are different bank accounts, such as a savings account, checking account, time deposit account, etc. For starters, a savings account is the best.
The main advantage of a savings account is that it can come with an ATM card or a debit card. Today, most accounts come with both. With an ATM and a debit bank account, you can make purchases without paying cash. You just present your card at the register, enter your PIN, and the store will automatically deduct money from your account.
This helps you save money because the less tempted you become to spend when you don’t see physical cash in your wallet. ATM and debit cards have a daily withdrawal or spending limit. What’s more, they earn interest, although it’s just a tiny amount. But the more significant the amount you deposit, the higher the interest it makes.
Reducing your expenses is another way to save money. And you don’t necessarily need to sacrifice some needs or wants to do it. For example, if you want to shop, look for special promos like discounts. If you drive a car, fill your tank in advance if you’re anticipating a price increase in fuel. These small acts can result in big savings.
2. Follow Financial Blogs or Vloggers
Since you spend most of your time on the internet nowadays, use the web to educate yourself about finance and investments. The fact that you’re reading this blog means you’re already doing it. Afterward, check out some well-known financial advice sites, such as the following:
- Wise Bread
- Banking Sense
Moneymax PH is also worth checking out, especially for Filipino audiences. Then get to know some Filipino financial bloggers too, such as Chinkee Tan, Izza Glino, Rose Fres Frausto, Ameena Rey-Franc, to name a few.
3. Read Books About Finance and Investments
When was the last time you even held a book? Even if the internet provides all the information nowadays, you still need books in your life. There are numerous titles about finance and investments for beginners. Consider getting the following books:
- “I Will Teach You to be Rich” by Ramit Sethi
- “You’re So Money: Live Rich, Even When You’re Not” by Farnoosh Torabi
- “Generation Debt: Take Control of Your Money” by Carmen Wong Ulrich
Once you get the hang of budgeting, start reading investment books. These titles are great for beginners:
- “The Little Book of Common Sense Investing” by John C. Bogle
- “A Beginner’s Guide to the Stock Market” by Matthew R. Kratter
- “Broke Millennial” by Erin Lowry
4. Don’t Turn Away From Long-term Securities
Many people immediately turn away when insurance enters the discussion. As much as insurance agents can sound brash and overbearing, they make sense. Insurance policies and other long-term investments benefit you in situations where you’d need cash fast. It also ensures that you can provide for your family if you unexpectedly pass away. Even if you don’t want to think of that, it’s better to prepare for it than leave everything to fate.
Other long-term securities you should learn about are mutual funds, unit investment trust funds, stocks, and real estate. A savings account is a form of investment too, but a low-risk one, so it yields low returns. Moderate- to high-risk investments, such as long-term securities, yield higher returns after several years. They’d benefit you when you retire or if you want to retire early.
Financial literacy isn’t only for the rich. People from all walks of life deserve to learn it. Taking these steps will help you debunk any misconceptions you might have heard about finance and investments.