Americans are stressed out over money. One in four people aren’t confident they’ve got enough savings. Six out of ten have had debt from credit cards in the last year. And one in two have faced hurdles when buying a home due to rising home prices and insufficient funding for down payment. Are you experiencing the same difficulties involving money?
Learning How Your Money Works
Sound financial decisions can only come from a place of knowledge. When you know how to handle your money, however little it is, you’ll be able to budget better, save better, and invest well. These are just some of the goals for financial literacy, which is the ability to make informed and effective choices about your money.
It’s a critical skill that allows you to create path toward financial independence, allowing you to achieve stability. When you learn how to make financial decisions, you’ll gain the protection you’ll need against scrupulous practices. An educated consumer detects fraud, and with advanced financial knowledge, can prevent being victimized even by a most complex means of deception.
Financial literacy is also a way for you to realize dreams. Whether that dream is about owning a lakeside home or retiring at an early age, financial literacy is the tool that sets you up for life.
When you have a deep understanding of home loan options, from the Federal Housing Administration loan to fixed-rate loans, you’ll have the tools necessary to choose what’s right for you. When you know more about your credit score, you’ll have the opportunity to strengthen and use it to meet your financial goals.
But how do you achieve financial literacy?
The Key Principles
Financial literacy requires an understanding of five key principles, according to the Federal Financial Literacy and Education Commission. Those principles are:
- How to protect your money through insurance purchases and learning how to avoid fraud
- How to save and invest, from setting money aside for goals to building an emergency fund
- How to spend well by budgeting and shopping the right way
- How to get loans at the lowest possible rates, and maintaining a strong credit score through responsible repayments
- How much you earn from income, benefits, and withholding tax
Each of these components contributes to helping you budget better, save better, and invest better. But knowledge of these things are just part of your journey to financial literacy; you’ll also need the right tools and resources.
Your tools could include free but secure apps that allow you to track spending and create budgets. When information is at your fingertips, you’ll find it easier to manage your money.
Another crucial aspect to financial literacy is seeking professional guidance. As a consumer, you can’t be expected to know everything there is to know about investments and taxes. A licensed and experienced financial advisor would help you navigate those sometimes complex subjects. Work with one, and you may just achieve your financial goals quicker.
Money, the lack of it and managing it, can be stressful. But now when you’ve got the foundation for making informed decisions. Learn about money now so that you can make it work for your future.