Knowledge is power. Financial knowledge is life changing.
The lack of understanding of money and finances impacts overall wellbeing. Making informed financial decisions will help you achieve your financial and life goals.
Financial Literacy Defined
Financial literacy is understanding financial topics such as banking, credit, debt, and investing. The, using that knowledge to make informed financial decisions that impact everyday life. It begins basic personal finance – what are savings accounts, how checking and debit cards work, how credit cards work, ways to avoid debt, and how interest works in savings and debt.
Additionally, financial literacy includes the knowledge of budgeting, home and car buying, debt management, investing and retirement planning.
Why is Financial Education Important?
To help you make decisions you must have a better understanding of how various aspects of the financial systems work such as banking (checking and savings), credit reports and scores, and ways to avoid debt.
Financial education is important because there are a number of ways to get into financial trouble leading to increased financial stress. Financial literacy improves your ability to make sound financial decisions that lead to a higher quality of life.
- The burden of retirement planning rest on the shoulders of consumers. There is a plethora of choices you have to make from 401(k)s to insurance plans.
- As the cost of living increase, wages may stay the same and the need to stretch the dollar becomes increasingly important.
- There are more choices in banking products, credit cards, mortgages and investing products. The increase in financial products leads to a lot of confusion and bad choices.
- Additionally, there are more choices of financial services companies. The option to choose from banks, credit unions, brokerage firms, apps and financial technology startups can be overwhelming.
What can you do to increase your financial knowledge?
The first step is to acknowledge you need a better understanding of basic personal finance. By focusing on understanding simple banking terms and products and how to effectively use them, you’ll gain a motivation to further your financial understanding of more complex financial matters.
- Get informed by understanding the financial products you currently use. Ask questions from the providers to completely understand the products used.
- Proactively seek financial information by reading personal finance stories, blogs and attending seminars. Check free seminars and workshops offered at work, church, community centers and financial institutions.
- Get educated at work. Learn more about your workplace benefits and inquire with your Human Resource department about financial education programs offered to learn more about retirement and insurance planning.
- Read through the phroogal Guides. We offer a growing database of knowledge.