Financial literacy means having the knowledge and confidence to efficiently and effectively manage, save and invest money for you and your family.

This can include everything from getting out of debt, budgeting, insurance, investments, real estate, college and retirement planning to and tax and estate planning.

We all have different levels of financial literacy. Maybe you have a 401(k) but aren’t sure how else to plan for retirement. Maybe you’re wondering whether you should use a windfall to pay off your mortgage or pad the college fund.

Or, perhaps, thinking much about money beyond the day-to-day makes you want to bury your head in the sand!

Wherever you are on your financial journey, we will provide different ways to increase your financial literacy and help put your money to work for you and your family.

• How can I Improve my Financial Skills?
• Why is it Important to Increase Your Financial Literacy?
• What are the Basics of Financial Literacy?
• How can you Improve Your Financial Literacy?
• What is an Example of Financial Literacy?
• What are Some Reasons for Becoming Financially Literate?
• What are the Main Components of Financial Literacy?
• What are the 10 Principles of Financial Management?
• What Makes up Financial Literacy?
• How Can I Improve my Financial IQ?
• How Can I Get Financial Knowledge?
• How Can I Improve my Personal Finance?
• How Can We Improve Financial Education?
• Six Ways to Improve Your Financial Literacy
• Developing Personal Financial Literacy
• How to Improve Your Financial Situation
• How to Improve Financial Literacy of Students
• How to Improve Financial Literacy Skills
• Financial Literacy Podcast

How can I Improve my Financial Skills?

Another life skill we weren’t taught in school is how to handle money. Once again, we learn from how our parents handled money.

Read Also: Ways you can Improve Your Relationship With Money

Were they spenders? Were they savers? Did they teach you invest? Did they teach you about the stock market or how to save for retirement?

Just because you didn’t learn good financial skills in school doesn’t mean that you can’t learn them now. Here are some tips you can follow to get better at managing money.

1. Make a budget—and stick to it

Do you know where all your money goes? Do you know how much money you spend on things like going out to eat, seeing a movie, buying beer, or purchasing clothes? Most people don’t.

Are you one of those people who just prays every day that you don’t overdraw your bank account? If so, make your budget. Go back through your checkbook or bank statements for the last year and write down how much you spent in each category.

You will probably be surprised at how much of your money is “wasted” on things you weren’t even aware of.

2. Be a conscious consumer

When you go to the grocery store, do you have a list? Do you look at prices? Do you use coupons? There are many online resources and apps that can help you be more focused on what you are actually spending.

Don’t “sleep walk” through life. Be aware of every single cent you spend! When people don’t do that, their money tends to just evaporate.

It takes a bit of effort to look for coupons, make lists, examine the prices at the stores where you shop, but it’s worth it in the long run. And, it makes a BIG difference.

3. Balance your checkbook

These days, most people just rely on looking at their bank balance online. But if you only do that, then it allows you to not care what you are spending in the moment. But if you hold yourself accountable by recording everything, then you will not over-spend or overdraw your account.

4. Have a plan and a vision

In order to accomplish anything, you have to have a plan, right? I mean, if you wanted to go to San Francisco but you didn’t have Mapquest or a GPS to calculate your route, you would never get there! Instead, you would just drive aimlessly into nowhere.

That metaphor is pretty much what happens to you when you don’t have a financial plan. You often ask yourself, “Where did that money go?” But if you have a plan and a budget, then you will know exactly where your money has gone.

5. Think like an investor

As mentioned in the introduction, our educational system does not teach us anything about how to handle money—especially when it comes to how to grow it. But think about it.

Did the wealthiest people in the world just save $500 a month and leave it at that? Of course not! They learned how to turn that $500 a month into $1,000. Then $10,000. Then $100,000. And so on. You get the point.

You can’t expect to have a solid financial future if you’re not thinking about how to grow your money. So if you start to think like an investor, you’ll see your nest egg expand.

6. Work together with your partner/spouse on the same financial goals

If you’re married or in a partnership where you share money, then you need to work together. One of the biggest conflicts in relationships is money! Frequently, one person will be a saver, and the other will be a spender.

This doesn’t work! So it’s important that both you and your partner get on the same page about your financial goals.

Sit down together and make your budget. Meet with a financial adviser so you can learn how to invest your money wisely. But if nothing else, you need to make sure that the two of you have the same goal and vision. And that you actually stick to it!

7. Commit to saving money

Speaking of sticking to something, commitment is everything. You can’t do anything half-way. You can’t “sometimes” do something and “sometimes not.” You have to be consistent! You have to stay the course!

It’s kind of like losing weight. If you only occasionally eat less and exercise more, you MIGHT lose some weight. But chances are, you’ll probably just go back to your old habits.

So that’s why you need to commit to saving money and building your future. Otherwise, you might as well not even bother!

If our schools taught us these financial skills, then what I have talked about in this article might come naturally to us all. But for most of us, it doesn’t. But it’s not rocket science.

It’s just like anything—if you want it badly enough, you will do it! If you want to make your financial situation better you can do it! But you just need to start with the decision to do so.

Why is it Important to Increase Your Financial Literacy?

Financial literacy is important because it equips us with the knowledge and skills we need to manage money effectively. Without it, our financial decisions and the actions we take—or don’t take—lack a solid foundation for success. And this can have dire consequences:

• Nearly half of Americans don’t expect to have enough money to retire comfortably.
• Credit card debt has reached its highest point ever.
• Forty percent of Americans can’t afford a $400 emergency expense.

Given the above statistics, it might not be surprising that nearly two-thirds of Americans can’t pass a basic test of financial literacy.

What are the Basics of Financial Literacy?

Although there are many skills that might fall under the umbrella of financial literacy, popular examples include household budgeting, learning how to manage and pay off debts, and evaluating the tradeoffs between different credit and investment products.

Oftentimes, these skills require at least a working knowledge of key financial concepts, such as compound interest and the time value of money.

Given the importance of finance in modern society, lacking financial literacy can be very damaging for an individuals’ long-term financial success.

Unfortunately, research has shown that financial illiteracy is very common, with the Financial Industry Regulatory Authority (FINRA) estimating that some 66% of Americans lack financial literacy.

The lack of financial literacy can lead to a number of pitfalls. Financially illiterate individuals may be more likely to accumulate unsustainable debt burdens, for example, either through poor spending decisions or through a lack of long-term preparation.

This in turn can lead to poor credit, bankruptcy, housing foreclosure, or other negative consequences. Thankfully, there are now more resources than ever for those wishing to educate themselves about the world of finance.

One such example is the government-sponsored Financial Literacy and Education Commission, which offers a range of free learning resources

How can you Improve Your Financial Literacy?

Developing financial literacy to improve your personal finances involves learning and practicing a variety of skills related to budgeting, managing and paying off debts, and understanding credit and investment products.

Here are several practical strategies to consider:

Create a budget

Track how much money you receive each month against how much you spend in an excel sheet, on paper, or in a budgeting app.

Your budget should include income (e.g., paychecks, investments, alimony), fixed expenses (like rent/mortgage payments, utilities, loan payments), discretionary spending (nonessentials such as eating out, shopping, travel), and savings.

Pay yourself first

To build savings, this “reverse budgeting” strategy involves choosing a savings goal—say, a down payment for a home—deciding how much you want to contribute toward it each month, and setting that amount aside before you divvy up the rest of your expenses.

Manage your bill-paying

Stay on top of monthly bills so that payments consistently arrive on time. Consider taking advantage of automatic debits from a checking account or bill-pay apps, and sign up for email, phone, or mail payment reminders.

Get your credit report

Once a year, consumers can request a free credit report from the three major credit bureaus—Experian, Equifax, and TransUnion. Review it and dispute any errors by informing the credit bureau of inaccuracies.

Check your credit score

Having a good credit score helps you obtain the best interest rates on loans and credit cards, among other benefits.

Monitor your score via a free credit monitoring service and be aware of the financial decisions that can raise or lower your score, such as credit inquiries and utilization rates.

Manage debt

Use your budget to stay on top of debt by reducing spending and increasing repayment. 

Develop a debt-reduction plan, such as paying down the loan with highest interest rate first. If your debt is excessive, contact lenders to renegotiate repayment, consolidate loans, or find a debt-counseling program.

Invest in your future

If your employer offers a 401(k) retirement savings account, be sure to sign up and contribute the maximum to receive the employer match.

Consider opening an IRA and creating a diversified investment portfolio of stocks, fixed income, and commodities.

If necessary, seek financial advice from professional advisors to help you determine how much money you will need to retire comfortably and to develop strategies to reach your goal.

What is an Example of Financial Literacy?

Emma is a high school teacher who tries to teach her students about financial literacy. Through her curriculum, she attempts to educate them on the basics of a variety of financial topics, such as personal budgeting, debt management, education and retirement saving, insurance, investing, and even tax planning.

Emma reasons that although these subjects may not be especially relevant to her students during their high school years, they will nonetheless prove valuable throughout the rest of their lives.

Understanding concepts such as interest rates, opportunity costs, debt management, compound interest, and budgeting, for example, could help her students manage the student loans that they might rely on to fund their college education and keep them from amassing dangerous levels of debt and endangering their credit scores.

Similarly, she expects that certain topics, such as income taxes and retirement planning, will eventually prove useful to all students, no matter what they end up doing after high school.

What are Some Reasons for Becoming Financially Literate?

Live for today – and tomorrow

Yes, without doubt, get the most out of every day. A big splurge today might put you on cloud 9 but it will leave you short tomorrow, and even shorter next week. No-one wants to live like a pauper through uni.

It can be a real downer and impact your studies. Plan your spending across a whole term, or preferably a whole year, and you’ll enjoy a consistently great 8/10 lifestyle every day of your uni life. Budget now to enjoy ‘maximum utility’.

Become more employable

The business world revolves around money. And your finances are simply a microcosm of that business world. Companies have debts and credit, bills and earnings, budgets and growth opportunities, just like you.

Treat yourself as a business and you’ll learn an awful lot about how modern-day organisations tick and it’ll make you a meticulous money manager in no time.

And when it comes to graduating, you’ll be in a fantastic position to interact with future employers about inflation, interest rates, early repayments, down-payments, APR and more. Believe me!

Build a brilliant credit score

Adopting good financial habits can help build your credit history and increase your credit score. It’s very difficult for students to get credit on good terms because they haven’t yet had chance to build up their credit history.

This is why we don’t just look at your credit rating when reviewing your Future Finance student loan application – we always factor in your future earning potential too, based on your course and university.

But we’re pretty different like that. Most banks, mortgage lenders and car loan companies will demand that you have a good credit score before they hand over the money – or the keys.

The millionaire next door

If you read one book this year that isn’t on your course list make sure it’s this – “The Millionaire Next Door” by Thomas J Stanley and William D Danko.

It’s based on a US study in the 1990s that proved that people who ‘looked’ like they were rich – the Ferrari drivers, guys and girls with flash jewellery, couples who ate out at top-notch restaurants and went on fancy holidays – were generally very bad savers, terrible with money and ultimately had to work their ass off for decades to survive.

On the other hand, a high proportion of the country’s millionaires were the quiet, unassuming folk who lived in modest houses and worked hard for an average salary, but could afford to retire in their 40s.

It’s a mindset. Once you’ve succumbed you’ll find it effortless to resist the frivolous temptations of consumerism and embrace the things that give you real value in life – and end up with a lot more money in your pocket without sacrificing a thing.

If you want a second recommendation, go and buy (or preferably borrow) a copy of “Your Money or Your Life” by Joe Dominguez and Vicki Robin.

Know your true worth

It can be a huge advantage to understand what you’re worth to companies. For example, the high street banks see you as a potential life-long customer, someone who will one day be earning a big salary, taking out mortgages with them, investing into an ISA, opening savings accounts for your children and so on.

They don’t want to lose you. Play straight with them (eg, don’t abuse their credit facility) and they’ll be generous to you when you need it.

Similarly, retailers want to draw you into their brand from an early age. Barter for what you can get. If you have a local independent store you love, see if they’ll do a student discount for you.

See if they’ll do you an even bigger discount if you distribute flyers for them among your student friends – it’s a very attractive and lucrative audience for many firms.

What are the Main Components of Financial Literacy?

According to the Financial Literacy and Education Commission, there are five key components of financial literacy: earn, spend, save and invest, borrow, and protect. We will now examine them one after the other.

Earn: Understanding your paycheck

Before you can start spending, saving, and investing, you need to know how much money you make. If you make the same amount each month, this part is pretty easy.

Take a good look at your paycheck to identify your gross and net income, and note any other deductions, such as employer-sponsored health insurance or a retirement plan. 

If you’re one of the 32% of Americans whose income varies from month to month, calculating your income can be a little more difficult, but it’s still important. Once you’ve determined your monthly net income, you’re ready to spend (responsibly!) with a personal budget.

Spend: Creating a personal budget

A personal budget is just a plan for how you want to spend your money, but it’s also the most useful tool for achieving your financial goals.

To create a monthly personal budget, you’ll need to track your spending over the course of one month, and then break everything down into categories.

These can be broad, as in the popular 50 30 20 budgeting rule, or specific, for those of us who want to get into the nitty gritty of our spending habits. 

Save: Determining your financial goals

Everyone knows it’s important to save money, but it’s hard to spend less than you earn without specific financial goals to work towards. Your financial goals will depend on your unique situation, but should include:

• Saving for an emergency fund. Setting aside some money in a designated emergency fund will give you peace of mind, and also prevent a financial setback from overtaking your life. Financial experts recommend having at least three months’ worth of basic living expenses in an emergency fund.
• Planning for retirement. The experts agree: The earlier you start saving for retirement, the better. Most financial planners suggest setting aside at least 10% of your take-home pay each month for retirement savings in a 401(k), IRA, or both.
• Saving for a big purchase. Whether you’re hoping to buy a car, a home, or pay for graduate school, the sooner you start saving, the less you’ll have to put aside each month. 
• Paying off personal debts. Most people have some kind of debt, whether that’s student loans, credit card debt, or both. Check the interest rates on your loans: Paying off loans on time (or ahead of schedule) can save you thousands of dollars in interest.

Borrow: Credit cards, loans, and your credit score

Even if you’re a diligent saver, at some point you may have to borrow money to cover a large expense like a home or car. Maybe you borrowed money as a college student and are currently dealing with student loans or credit card debt.

Borrowing isn’t necessarily a bad thing—as long as you know how to compare loans and maintain a healthy credit score

APR (Annual Percentage Rate) is the key to comparing loans and credit cards. APR takes into account both the interest rate and fees to give you a more accurate idea of how much interest you’ll pay each year. A low APR means you’ll pay less interest over time, but how do you get one? 

In general, the higher your credit score, the less interest you’ll be charged. That means that if you’ve had financial difficulties in the past, you can get stuck in a vicious cycle where all of your money goes to paying off interest.

That’s why building healthy credit is one of the most important steps to becoming financially literate. 

Keeping a balance on your credit card is one of the easiest ways to rack up debt, but choosing the right credit card and using it responsibly can actually help you improve your credit score.

Protect: Preventing fraud and buying insurance

Once you’ve set yourself up with a solid budget and investment strategy, it’s important to protect the money that you’ve made.

This means regularly reviewing your bank accounts and credit card statements for mistakes or suspicious activity; keeping documents and passwords secure to prevent scams and identity theft; and buying the right kind of insurance to protect yourself in the event of an emergency. 

What are the 10 Principles of Financial Management?

Organize Your Finances

Organizing your finances is the first step to creating wealth. Credit cards, bank accounts, personal loans, brokerage accounts, mortgages, car loans and retirement accounts should to be tracked.

Budgeting software can provide complete solutions to track all such accounts, make on-time payments and more. Jeff Morris, a certified public accountant in Bethesda, Maryland, points out: “Once you enter your accounts and balances into budgeting software, you will be able to spend less time getting organized and more time making sense of your situation.”

Spend Less Than You Earn

Personal financial software provides powerful tools to help you track and budget your spending and take steps to achieve your long-term goals.

If you learn to track your finances and know where you spend the most, you’ll be able to control your money. “The best way to ensure that you either overcome debt or avoid it in the first place is to never spend more than you make,” Morris says.
 

Put Your Money to Work

Take advantage of the time value of money. Morris gives the following example: “A 21-year-old who invests $17.50 a day until retiring at the age of 65 at a 5 percent average annual investment return can be a millionaire.

At age 30, the required daily savings amount almost doubles. At age 40 the amount quadruples.” So save early and often, even if the amount is small.

Limit Debt to Income-Producing Assets

With credit cards and car loans, every penny you spend to repay that debt is money flushed down the drain. All but a few models of cars depreciate to zero and require more in repairs and finance charges than can be reasonably expected to be returned to the owner upon being sold.

Morris explains, “With their ultra-high interest rates, credit cards utilized to buy household goods and clothes that quickly wear out are bad bargains. If you have to be in debt, stick to financing items that retain their value over time, like real estate and education.”

Continuously Educate Yourself

Budgeting software often links to hoards of research that puts the collective knowledge of Wall Street at your fingertips. “Read every financial periodical, book and blog you can find from well-regarded financial authors,” Morris recommends.

“Understand why you are investing so that you will stick to your plan. Periodically gather research so you do not miss excellent investment opportunities.”

Understand Risk

The key to understanding return on investments is that the more you risk, the better the return should be. This is called a risk-return trade-off. Investments like stock and bonds that have a higher rate of return often have a higher risk of losing the principal that you invested.

Investments like certificates of deposit and money market accounts with a lower rate of return have a lower risk of losing principal.

Since no one knows the future, you cannot be 100 percent sure any investment will do well. Morris explains, “If you diversify your investments, one can go sour without severe impact to your overall portfolio.”

Diversification Is Not Just for Investments

Find creative ways to diversify your income. Everyone has a talent or special skill. “Turn your talents into a money-making opportunity. Investigate ways to make money from home and launch a home-based business,” Morris says.

The extra income can supplement your full-time income or even result in an exciting career change. Good financial management software can show you how even a slight improvement in income can positively change your financial profile.

Maximize Your Employment Benefits

Employment benefits like a 401(k) plan, flexible spending accounts and medical and dental insurance yield some of the highest rates of return that you have access to. “Make sure you are taking advantage of all the ways benefits can save you money by reducing taxes or out-of-pocket expenses,” says Morris.

Pay Attention to Taxes

Financial planning software helps you manage your tax information. For example, Quicken quickly analyzes taxable investments and provides powerful organizing tools that make year-end tax filings go much smoother.

Morris emphasizes, “We all know that any money you make is going to be taxed. That is why it is important to consider the related tax implications for every investment.”

Plan for the Unexpected

Despite of your best efforts, you’ll face unforeseen emergencies. Morris urges, “Save enough money and stock up on insurance to be able to weather extended unemployment, accidents, catastrophic medical care, large car or house repairs and natural disasters.”

Read Also: The Ultimate List of Personal Finance Tips

Increasing the amount of money you save when times are good can help you manage the cost impact of hedging against bumps in the road, making sure unexpected financial exposure does not derail your long-term goals and your family’s financial security.

What Makes up Financial Literacy?

According to the Financial Literacy and Education Commission, there are five key components of financial literacy: earn, spend, save and invest, borrow, and protect.

Earn: Understanding your paycheck

Before you can start spending, saving, and investing, you need to know how much money you make. If you make the same amount each month, this part is pretty easy. Take a good look at your paycheck to identify your gross and net income, and note any other deductions, such as employer-sponsored health insurance or a retirement plan. 

If you’re one of the 32% of Americans whose income varies from month to month, calculating your income can be a little more difficult, but it’s still important. Once you’ve determined your monthly net income, you’re ready to spend (responsibly!) with a personal budget.

Spend: Creating a personal budget

A personal budget is just a plan for how you want to spend your money, but it’s also the most useful tool for achieving your financial goals. To create a monthly personal budget, you’ll need to track your spending over the course of one month, and then break everything down into categories.

These can be broad, as in the popular 50 30 20 budgeting rule, or specific, for those of us who want to get into the nitty gritty of our spending habits. 

Save: Determining your financial goals

Everyone knows it’s important to save money, but it’s hard to spend less than you earn without specific financial goals to work towards. Your financial goals will depend on your unique situation, but should include:

• Saving for an emergency fund. Setting aside some money in a designated emergency fund will give you peace of mind, and also prevent a financial setback from overtaking your life. Financial experts recommend having at least three months’ worth of basic living expenses in an emergency fund.
• Planning for retirement. The experts agree: The earlier you start saving for retirement, the better. Most financial planners suggest setting aside at least 10% of your take-home pay each month for retirement savings in a 401(k), IRA, or both.
• Saving for a big purchase. Whether you’re hoping to buy a car, a home, or pay for graduate school, the sooner you start saving, the less you’ll have to put aside each month. 
• Paying off personal debts. Most people have some kind of debt, whether that’s student loans, credit card debt, or both. Check the interest rates on your loans: Paying off loans on time (or ahead of schedule) can save you thousands of dollars in interest.

Borrow: Credit cards, loans, and your credit score

Even if you’re a diligent saver, at some point you may have to borrow money to cover a large expense like a home or car. Maybe you borrowed money as a college student and are currently dealing with student loans or credit card debt. Borrowing isn’t necessarily a bad thing—as long as you know how to compare loans and maintain a healthy credit score

APR (Annual Percentage Rate) is the key to comparing loans and credit cards. APR takes into account both the interest rate and fees to give you a more accurate idea of how much interest you’ll pay each year. A low APR means you’ll pay less interest over time, but how do you get one? 

In general, the higher your credit score, the less interest you’ll be charged. That means that if you’ve had financial difficulties in the past, you can get stuck in a vicious cycle where all of your money goes to paying off interest. That’s why building healthy credit is one of the most important steps to becoming financially literate. 

Keeping a balance on your credit card is one of the easiest ways to rack up debt, but choosing the right credit card and using it responsibly can actually help you improve your credit score.

Protect: Preventing fraud and buying insurance

Once you’ve set yourself up with a solid budget and investment strategy, it’s important to protect the money that you’ve made. This means regularly reviewing your bank accounts and credit card statements for mistakes or suspicious activity; keeping documents and passwords secure to prevent scams and identity theft; and buying the right kind of insurance to protect yourself in the event of an emergency.

How Can I Improve my Financial IQ?

there are many ways to increase your financial literacy, including:

1. Online Articles

MoneyCrashers for example has information on a wide variety of financial topics. You can learn how to fix a broken budget, boost your savings, rebuild damaged credit, pay off credit card debt, and choose investments for your 401(k) — and that’s just scratching the surface.

2. Books

Head down to your local public library and check out the selection of books filed under personal finance, getting out of debt, investing, home buying, financial independence, or any other financial topic that interests you. A few classic personal finance books to look for include “The Total Money Makeover” by Dave Ramsey, “Your Money or Your Life” by Vicki Robin and Joe Dominguez, and “The Millionaire Next Door” by Thomas Stanley and William Danko.

3. Audio

Numerous radio shows and podcasts deal with money matters. Check out “The Dave Ramsey Show” for overall money advice, “So Money” to learn more about business matters, “Smart Passive Income” to learn about ways to earn passive income when you’re not working, and “Planet Money” for information about the economy.

4. Video

If you prefer visual infotainment, you can choose from a wide assortment of TV shows and YouTube videos about investing and personal finance. Tune into “Mad Money” on CNBC for advice on investing, “The Profit” on CNBC or Hulu for business, and The Financial Diet on YouTube for money tips for young people.

5. Classes

If you’d like to learn about any financial topic in more depth, consider taking a class. Many colleges offer courses you can take online for a modest fee or even free. Your local community college may also offer finance courses at reasonable prices. You can find online financial courses on websites like Udemy and Coursera.

6. Financial Professionals

Finally, if you really want to get a handle on your personal finances, talk to a financial professional. An accountant can offer financial advice about your taxes, an investment advisor can help you choose investments, and a financial planner can help you get a better grasp on your financial situation as a whole.

How Can I Get Financial Knowledge?

Wherever you are on your financial journey, here are six ways to increase your financial knowledge and help put your money to work for you and your family:

Subscribe to financial newsletters.
For free financial news in your inbox, try subscribing to financial newsletters from trusted sources. And if you’re not already a subscriber, you can subscribe to Athene’s Smart Strategies, designed to help you take your financial journey to the next level with expert advice on finances and lifestyle.

Listen to financial podcasts.
Podcasts can be a great way to soak up financial news while you do housework, run errands or walk the dog. For ideas, check out Best Personal Finance Podcasts to Listen To from U.S. News and World Report.

Read personal finance books.
If you prefer books, there’s no shortage when it comes learning about personal finance. Explore Insider’s 17 best personal finance books for 2021 to help you get started.

Use social media.
Use your favorite social media channels to follow financial experts on Twitter or LinkedIn, or maybe join a personal finance Facebook group.

Start keeping a budget.
All of the financial guidance from experts won’t mean much if you don’t know where your money is going every month. Start tracking your spending and set up a budget using a simple spreadsheet or website apps.

Talk to a financial professional.
A financial professional can answer your financial questions, whether it is about the basic day-to-day money situations or more complex long-term scenarios. They can also assess your current situation, help you make a plan for all of your financial needs and help you stay on track going forward.

Whatever your level of financial literacy, it’s important to keep your knowledge base growing. Any step you take toward getting a better handle on your financial situation is a step in the right direction. The key is to just start. Knowledge is power and can help you make more wise and confident financial decisions.

How Can I Improve my Personal Finance?

Personal finances refer to money management and how your future is planned. Improving your financial health will spare you stress later. With small investment efforts, you can secure a favorable future ahead of you. Here are some ways in which you can improve your personal finances:

Create and maintain your budget

Make sure your finances are organized. Manage them using tools available offline and online. Keep track on where your money goes. Evaluate and analyze your net worth frequently. Your net worth is a representation of where you currently stand.

This will fluctuate often with time and disturbances in the market. Tracking your financial standing will help you evaluate your progress and highlight the areas which require improvement. Create a personal budget. Figure out what your expenses are and prioritize your spending.

Manage your expenses into categories like education, housing, food, utilities, transportation and savings. Learn to manage your money. If you have money left over after all your expenses, decide how to use them. Utilize it wisely.

Have savings

You should have enough money saved at all the times to face unforeseen emergencies. Start saving for your retirements as soon as possible. You never know which turn your life might take. Be prepared for the worst at all times. Reinvest your earnings as a method of saving. The longer the investment is going to be, the greater will be the return.

If you are working for a company and earn a salary each month, keep a check on provident funds. Check your pf balance on a regular basis. The sooner you start your saving plans, the easier it will be for you to reach your long-term financial goals. Consequently you will also have to save less each month.

Recognize lifestyle inflation

The more you earn, the more you spend money. This is the general trend followed by most people. This phenomenon is known as lifestyle inflation. If you spend excessively, it will damage your long-term wealth. People usually have the desire to keep up with the ‘elite’ society. If the world dines in excessively expensive restaurants, you might be pressured to do the same as well.

However, this can cost you a lot in the long run. As you start to earn more, some increase in spending is normal to enhance your social and professional lifestyle, but extravagance is not a positive indication.

Identify your needs and your wants

Make sure you have drawn the line between your needs and your wants so you can make better decisions when spending. Needs are those things that you must have in order to survive like food and shelter, whereas wants are your desires that are not required for your survival. Make sure that your choices are clear.

You can get an economical car rather than buying an expensive BMW because both will serve the same purpose. Prioritize your needs. Once your needs are satisfied then consider the possibility of achieving your wants if it seems reasonable to do so according to your budget.

Secure emergency funds

As mentioned above, you never know what might happen next. Dedicate some amount of your income to emergency funds. Ensure that you are able to fight with unexpected expenses.

How Can We Improve Financial Education?

But getting smarter about your money doesn’t have to be complicated or time-consuming. By taking a few minutes a day to educate yourself and form smart, simple money habits, you can be well on your way to improved financial literacy. Follow these expert tips from Forbes Finance Council members to get started.

1. Read As Much As You Can

Begin to read newspapers and magazines geared toward money matters. The financial section of local/regional newspapers are great resources, as are the Wall Street Journal, Barron’s, Fortune, Forbes and Money. – Ibrahim AlHusseini, The Husseini Group

2. Understand the “Cashflow Quadrant”

Read “Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom” by Robert Kiyosaki. Most people don’t know that there are four broader ways of making money – employment, self-employment, business and investing.

And it’s kind of like a ladder; you can work your way up to being an investor, but you need resources and specialized knowledge to do well in that field. As Warren Buffet said, a better business owner makes a better investor. – Ismael Wrixen, FE International 

3. Use Financial Management Tools

One great way to gain financial literacy is to attach a finance management tool to your personal accounts. Sign up for one of these services and connect your checking, savings, credit cards and mortgage. Financial management tools like Mint are great aids to improving financial literacy. These tools will also help manage your personal finances. It’s a win/win. – Charlie Youakim, Sezzle

4. Ask For Expert Advice

Talking to an experienced advisor can help people understand how to budget and save. An advisor can also look at how they are handling credit and debt and make suggestions on how to pay off, consolidate and manage finances with a plan for achieving a goal. – Nick Stamos, Sindeo

5. Utilize Your Network To Help You Achieve Your Goals

Whether it’s a podcast, webinar, e-book or blog, there are thousands of educational resources to help us improve our personal finances. While these resources are valuable, don’t ignore the opportunity to gain expert advice from your immediate network. Utilize the knowledge (and lessons learned) from your circle of influence – successful friends, family members, your boss or even your CPA. – Domenica D’Anna, Supreme Lending

Six Ways to Improve Your Financial Literacy

With so many financial products on the market available to consumers, it’s more important than ever to make sure you’re financially literate. How can you improve your financial literacy? Here are six ways:

Manage your money week to week

You should be actively deciding where you want your money to go. What is important to you? Don’t look back and wonder where it went.

Plan for the future

Have a goal for the future and a plan to reach it. You’ll be surprised what you can achieve when you put your mind to it. But without a plan, it won’t happen.

Make your finances as easy as possible

We all have good intentions, but don’t necessarily get around to it. Make things automatic instead. Have money go automatically into your savings account or investment account every payday. Set up a direct debit to pay your regular bills.

Talk to your partner

Talk to your partner about where you stand financially and where you want to go. Nothing kills a relationship like financial tension.

Investing is not gambling

You will gain financial success by steady, sensible decisions over many years, not by gambling on spectacular returns or picking a winner. The key concepts are:

• Diversification (spreading your investment).
• Buy things you understand (or use an unbiased professional who understands).
• Invest within your risk comfort zone (where you can afford the likely ups and downs).

Seek help and advice

Don’t be scared to seek advice, either to build your wealth or if things go wrong.

Developing Personal Financial Literacy

1. Hit the Books

In order to get started, personal finance books will become key in your quest to be financially literate. It was crucial for my education, especially coming from no background in finance or investing.

Dedicate a minimum of 1-2 hours each week to reading books about managing your money, investing, how to budget, etc.

2. Read Magazines and Online Publishers

Some persons find books to be the most important, but financial magazines and online publications can be equally important to your financial education.

Think publications like Kiplinger, Financial Times, Fortune, and there are tons of personal finance bloggers (like me).

Also, websites like Bankrate, Student Loan Hero, BiggerPockets, GoBankingRates, and Investopedia have tons of useful information, online calculators, and more.

3. Use Financial Management Tools

Managing your finances and money doesn’t have to be hard or boring. Thanks to the tech and the internet, there is an abundance of money tools to help you be more proficient.

But besides helping you organize and visualize your life, these financial resources can help you learn a lot too. Many of these tools have great learning centers or blogs.

Take a look at these financial products:

• Savology – Free and simple budgeting software to help you stay organized.
• Personal Capital – Keep track of your net worth, investments, and spending for free.
• Blooom – Ensure your 401k or IRA is on track, catch hidden fees, and get portfolio recommendations for free.

4. Listen to Money Podcasts

Being able to dedicate time to reading can be challenging. You may have a busy work and family life, which is exactly why podcasts are perfect.

Podcasting is huge!

And there are many great ones you can listen to on your way to or from work, doing chores, or even at work (if it doesn’t disrupt your productivity).

There are too many awesome podcasts to list and all vary in length from 10 minutes to almost an hour of strong info. This is free financial advice you can listen to!

5. Take a Financial Literacy Course

So besides books and online publications, you can totally get involved in a financial literacy class or course. Whether that is at an online school, college course, adult education center, etc.

This is if you feel you want to go a step further or need the structure to learn. Many are paid, but there are some free courses online that can be a great educator too.

6. Get Your Math On

For you to be financially literate, you’ll need to bust out some of the most basic math skills.

Brush up on some math or look into some basic formulas that can help you organize your money, savings percentages, and help you to budget.

We know spreadsheets can make this easier or software will do the math for you. It’s fine if you do, but know how the math works, why it’s that number, and if you needed to — you could calculate that yourself.

7. Read the Government Resources

Some of you may have a slight distrust of the government — tin foil hats, big brother is listening, etc.

Okay, all that aside — the government does have some useful resources to try and get you to learn more about personal finance. More information is on the Treasury website with other resource links.

8. Break Your Consumer Mentality

A big challenge for many Americans, is we have a consumer mentality. But it’s really unavoidable at first.

We are targeted with ads EVERYWHERE, media promotes lavish lifestyles, social media makes of envious of others possessions, we worry too much about what others have, etc.

Over your financial literacy journey, you’ll learn to break the consumer mentality and developer an investor mentality.

How to Improve Your Financial Situation

With a little planning and a lot of discipline, you can improve your financial situation and begin making tangible investments in your family’s future. Start by following these seven debt-reducing, income-boosting steps.

Step 1: Don’t Play the Blame Game

Before you jump into the treacherous waters of debt reduction, take some time to prepare yourself for what’s to come. This isn’t your typical 12-step program — after all, you’re not powerless in the face of your debts. Nevertheless, the first step on your journey requires you to accept that you have a financial problem that needs to be addressed.

At the same time, it’s crucial that you don’t overreact by blaming your own questionable past decisions for your financial troubles. It’s equally important that you don’t blame others for your misfortunes.

No matter how your financial situation unraveled, it’s far more important that you wash your hands of the past and focus on the future. As with any big undertaking, a positive attitude will go a long way in your fight against debt.

Step 2: Tally Up Your Budget as It Stands

It might be painful to do so, but you need to get a fair and unblinkered look at your current financial situation. This will require you to create a “snapshot” of your current household budget or lack thereof.

Even if it happened in some long-forgotten high school class, you’ve done this before. Spend an afternoon poring over your utility bills, grocery receipts, credit card statements and other expenses. Do the same with your income statements, including any special interest-bearing accounts and invoices that catalog your earnings. If you own a business, this is liable to be especially tough.

However, it’s absolutely necessary.

Once you’ve accounted for every income stream and expenditure, determine how much cash you’re bleeding on a monthly basis. If your income is significantly lower than your expenses, you’ll need to take immediate steps to slash your outlays and shore up your budget.

You’ll have to cut out frivolous entertainment expenses, name-brand clothing purchases and most restaurant meals. You may even need to go further and reduce the amount of water or energy that you use in your home. During this process, remember to hold fast. Your ability to get your debts under control depends entirely on your ability to make painful but necessary budget cuts.

Step 3: Cash Is King

There may be a simple way to ease the sting of these personal budget cuts. As soon as you decide to improve your financial situation, take it upon yourself to stop using all of the credit cards and lines of credit that you’ve accumulated over the years.

Since doing so may damage your credit score, you should refrain from calling up your issuers to cancel your cards or close your accounts. Nevertheless, don’t be shy about tossing all of those insidious pieces of plastic into a dark corner of your home.

For the foreseeable future, you’ll need to concentrate on paying down your debts with the money that you earn and save. Obviously, it would be be counterproductive to accumulate more debt in the process. Resist this temptation by using cash and debit to cover your ongoing expenses. If you don’t have enough cash to pay for something, you’ll have to go without it.

Step 4: Learn to Love the Hustle

There’s no law against hard work, and no one will begrudge you for sacrificing some of your free time to make your family more comfortable. To boost your earnings in short order, look for a second job that lets you work flexible hours in the evenings or on the weekends. Even in a soft economy, retailers, restaurants and other high-turnover businesses are almost always hiring.

If you’re not willing to return to waiting tables or working the checkout line, look for more attractive consulting or freelancing opportunities. Don’t be afraid to leverage a long-dormant skill: Many stock photographers, writers and tax professionals make good money through part-time work.

Step 5: Skimp on the Right Things

If you’re serious about improving your financial situation, you’ll inevitably need to make some sacrifices. This requires a surprising amount of discipline. After all, many non-essential expenses are frustratingly seductive.

In order to afford tickets for an upcoming NBA match-up, you might craft an impossibly tight budget for your kids’ annual back-to-school shopping trip. Instead of making an extra-large payment on one of your high-interest credit cards this month, you might succumb to a can’t-miss deal on a new set of golf clubs.

While these slip-ups are understandable, they have no place in a serious debt reduction plan. It’s a matter of delayed gratification: If you improve your financial situation in the here and now, you’ll have plenty of time to enjoy life’s finer things in the future.

Step 6: Time Really Is Money

In the weeks and months after you make your decision to do something about your debts, you’ll find yourself in what millions of rabid sports fans and overworked office drones refer to as “crunch time.” This is not the time to be timid.

Permanently reducing your debts requires bold, lasting action. There are multiple ways to achieve this goal, but none of them involve half-measures. After accounting for all of your fixed household expenses and “necessity” purchases like food and clothing, you should be using the bulk of your take-home earnings to pay down your debts.

Whether you choose to use a tried-and-true method like Dave Ramsey’s “debt snowball” or simply aim to pay off your high-interest credit card debts before your lower-interest home equity loan, your debt reduction spree needs to be targeted for maximum effect.

For a variety of reasons, the first few months are likely to be the hardest. When you get down on yourself, remember that every dollar of debt that you pay down now is a dollar of debt that won’t accrue interest in the months and years to come. Mentally prepare yourself for a period of austerity and come out of the gate with your debt-fighting guns blazing. Your future self will thank you for your present sacrifice.

Step 7: Reward Yourself

It’s not totally outlandish to equate your struggle to reduce your debts and improve your financial situation with millions of Americans’ valiant attempts to lose weight and get in shape. Like eating right and getting plenty of exercise, achieving meaningful debt reduction may require you to make big changes to your lifestyle and everyday decision-making processes.

You can take a page out of the dieting book by setting key goals or milestones and rewarding yourself for reaching them. When you pay off a high-interest credit card, celebrate with a tasteful, inexpensive restaurant meal or a night out at the movies with your family.

When you reach larger milestones like closing out a personal line of credit or repaying your last student loan, take a sick day and bring your kids to the local major league ballpark. Although you shouldn’t go overboard until you’ve settled all of your debts, the occasional morale-booster won’t hurt.

How to Improve Financial Literacy of Students

While many people lack financial literacy, college students may be among the worst. In fact, according to a recent study by U.S. Bank, “Student Perspectives on Money and Finance,” not only do many college students not budget or save, but many can’t differentiate financial myths from truths.

Meanwhile, just under half (49 percent) of college students gave themselves C’s when asked to grade their money management skills. Only 11 percent gave themselves A’s, while five percent self-reported themselves as failing.

Which begs the question: How can you start planting your own fruit-bearing financial tree?  These three tips can help.

1. Understand the importance of starting early.

There’s no better application of the expression, “Don’t put off until tomorrow what you can do today” than when it comes to money management. College students may not have a lot to save, but the earlier they start, the more time their money has to grow.

Explains Time magazine, “Saving for retirement is about maximizing compound interest. Compound interest is interest that builds onto itself. Over decades, your original contributions will grow exponentially because of compound interest.”

2. Take a personal finance course.

Experts say kids should start learning financial literacy at home. However, the reality is that this isn’t happening. Says Carla Hindman, director of financial education at Practical Money Skills, “Parents are our children’s first teachers. But not every child has the same opportunities at home.”

Unfortunately, financial literacy may not be part of the typical high school education, either. But just because it’s not being taught doesn’t mean there’s no means through which to learn. Many colleges and universities are stepping up and and offering programs designed to education students on how to manage their finances, including must-do money management tips.

And even if your school doesn’t offer financial literacy programs, you’re not out of luck thanks to the abundance of money management and financial literacy tools available online.

3. Commit to keep learning.

While college and grad school offer perfect opportunities to start learning (and applying) financial literacy, your financial needs will change over time — and so should your knowledge. Whether you’re looking to trim down your credit card debt or refinance a home, committing yourself to ongoing financial literacy can help you maximize your money through all of the phases and stage of your life.

How to Improve Financial Literacy Skills

Developing financial literacy to improve your personal finances involves learning and practicing a variety of skills related to budgeting, managing and paying off debts, and understanding credit and investment products. Here are several practical strategies to consider.

Create a Budget—Track how much money you receive each month against how much you spend in an Excel sheet, on paper, or with a budgeting app. Your budget should include income (paychecks, investments, alimony), fixed expenses (rent/mortgage payments, utilities, loan payments), discretionary spending (nonessentials such as eating out, shopping, and travel), and savings.

Pay Yourself First—To build savings, this reverse budgeting strategy involves choosing a savings goal (say, a down payment for a home), deciding how much you want to contribute toward it each month, and setting that amount aside before you divvy up the rest of your expenses.

Pay Bills Promptly—Stay on top of monthly bills, making sure that payments consistently arrive on time. Consider taking advantage of automatic debits from a checking account or bill-pay apps and sign up for payment reminders (by email, phone, or text).

Get Your Credit Report—Once a year, consumers can request a free credit report from the three major credit bureaus—Experian, Equifax, and TransUnion—through the federally created website AnnualCreditReport.com.5 Review these reports and dispute any errors by informing the credit bureau of inaccuracies. Because you can get three of them, consider spacing out your requests throughout the year to monitor yourself regularly.

Check Your Credit Score—Having a good credit score helps you obtain the best interest rates on loans and credit cards, among other benefits. Monitor your score via a free credit monitoring service (or, if you can afford to and want to add an extra layer of protection for your information, one of the best credit monitoring services). In addition, be aware of the financial decisions that can raise or lower your score, such as credit inquiries and credit utilization ratios.

Manage Debt—Use your budget to stay on top of debt by reducing spending and increasing repayment. Develop a debt-reduction plan, such as paying down the loan with the highest interest rate first. If your debt is excessive, contact lenders to renegotiate repayment, consolidate loans, or find a debt-counseling program.

Invest in Your Future—If your employer offers a 401(k) retirement savings account, be sure to sign up and contribute the maximum to receive the employer match. Consider opening an individual retirement account (IRA) and creating a diversified investment portfolio of stocks, fixed income, and commodities. If necessary, seek financial advice from professional advisors to help you determine how much money you will need to retire comfortably and to develop strategies to reach your goal.

Financial Literacy Podcast

When it comes to finances there’s ALWAYS more we can learn to be better. With the economy changing every single day, there’s no way we can know every new change as they happen, but thanks to these podcasts, we can stay up on the economy and up our financial literacy.

Brown Ambition

Known as “The Budgetnista,” personal-finance expert Tiffany Aliche teams up with former finance and business editor of Business Insider, Mandi Woodruff, as they stir up conversation centered around news, relationships, and finance.

Planet Money

Very interesting and super informative, Planet Money is an American podcast and blog produced by NPR in association with the parent podcast hit, This American Life. From tax mishap stories to economic updates we all should be aware of, this show is financial gold.

Paychecks & Balances

Coined as a “funformative podcast,” this show is intended for millennials interested in making money, saving money and getting out of debt. Hosted by Rich Jones and Marcus Garrett, Paychecks & Balances provide entertaining insights and helpful tips on money management, professional growth, and other topics relevant to 20 and 30-somethings trying to get ahead.

The Stacking Benjamins Show

This show applies a light touch to a variety of personal finance topics, including quirky investments, money habits that waste your time, and how to endure a timeshare sales pitch without falling for it.

Redefining Wealth with Patrice Washington

Wealth is deeper than money and Patrice Washington goes deep with her Redefining Wealth podcast. Dedicated to educating about financial literacy and encouraging people to chase purpose over money, this podcast is a must-listen.

The His & Her Money Show

This show covers the real questions that we all should ask ourselves before saying “I do”. From home finances to personal debt reduction, this show goes there to give insight on what to expect when conjoining your finances for newly married couples and others who want to climb out of debt.

Smart Passive Income

A top-ranking and award-winning business podcast, Smart Passive Income is the podcast where it’s all about working hard now so you can sit back and reap the benefits later.

Finally

From all we have discussed so far, you can see that financial Literacy is very important if you want to enjoy a life free from financial worries. We have also examine some steps you can take to improve your financial literacy.

It’s now in your hands, you need to apply all the tips that has been mentioned in this article and you will notice your financial life improve greatly.