Financial literacy has long been a topic the education system has failed to teach its best and brightest. That’s unfortunate because it’s likely to be some of the most important information you’ll learn throughout your entire life. Whether you’re just starting to learn or have a modicum of knowledge on the topic, here’s how to improve your financial literacy.
Read a Book
If you’re just starting to learn about your finances, one of the best ways to do so is to sit down and read an introductory text on personal finance. Don’t go for gimmicky “Get Rich Quick” ones either, go on your local library’s website and search “Personal Finance”. Find the absolute driest book you can and start reading. You’ve got to walk before you can run, and right now you’re just trying to get a basic understanding of interest rates, lines of credit, financial leverage, and other basic foundations of a financial education that can set you up for financial success in the future.
Build a Budget
You need a budget. You don’t have to start making huge changes, but one of the most important parts of becoming financially literate is actually looking at your finances. Go over your bank statements, see what you bought, see how much money is coming in, and see how much money you’re leftover with at the end of the day.
Start monitoring it every month; you won’t even have to make a conscious effort to start saving money. Once you actually start paying attention to what you’re spending, you’ll pretty much automatically start thinking more about your purchases.
Figure Out What a Credit Score Is
Before credit bureaus existed, getting out of debt was easy. You just hopped on a train and moved to the other side of the country. In modern society, it’s not so easy. Creditors report everything to three centralized credit bureaus that keep track of whether you pay your bills on time. If you do, you get a good credit score in return that lets other creditors know you’re good for it.
If you don’t, the opposite happens, and getting a loan without a high-interest rate becomes a virtual impossibility. Destroying a credit score is easy, building one back up? Not so much. But if you’re in credit card debt, there’s an option that might help. It’s called debt consolidation, through a company like www.Bills.com, you can consolidate all of your high-interest, unsecured loans into one larger loan with a reduced interest rate.
Learn to Read Economic Indicators
If you’re looking for news about the state of the economy, some of the best are actually our government’s own websites. That’s because we have a few institutions that just report economic indicators without any spin. If you’re able to learn how to read into these, you can spot an economic down-turn or up-swing on the horizon easily.
For updates on job growth or decline, the Bureau of Labor Statistics has you covered, providing an incredible look at which industries are doing well, and which aren’t. Things like unemployment, jobs in every sector, and detailed reports on economic indicators like the consumer price index are available.
Learn About Investing, and Start as Soon as You Can
When you hear “Investing”, if images of different stock tickers pop up in your head, stop right there. Buying and selling individual stocks is best left up to the experts. For the average person who doesn’t have 12 hours a day to monitor candle charts, you should look into either mutual or index funds.
A mutual fund is essentially a big pool of money from different investors that gets managed by a team of experts who pick and choose different individual stocks for you and pay you a return that averages around 7-10% every year over the course of a decade. Whatever you decide to put your money in, a mutual fund, an IRA, or a 401(K), it’s best to start as soon as possible, because you’ll need that money to last you your whole retirement.