FITNESS INSPIRATION – ANDREA SAR
How to Stop Being Financially Illiterate
Financial literacy is a crucial life skill, yet many of us enter adulthood lacking basic knowledge about money management. Remaining financially illiterate can be extremely costly over a lifetime. Luckily, there are steps you can take to educate yourself and change your financial trajectory.
Learn Financial Terminology
Familiarize yourself with important financial terms. Being able to confidently discuss concepts like:
- Compound interest
- Annual percentage rate (APR)
- Asset allocation
- Dollar cost averaging
makes it easier to grasp key principles and make informed decisions. Investing in learning is investing in yourself.
Understand Your Credit Report
Knowing how to access, read, and improve your credit report is foundational. Learn what impacts your credit score and how to avoid delinquencies. Dispute any errors on your report. Monitoring your credit regularly is vital.
Create a Budget
One of the cornerstones of financial literacy is being able to track income and expenses and create a realistic budget that aligns with your values and goals. Apps and spreadsheets can help automate this process and increase awareness of spending habits.
Build an Emergency Fund
Saving for unexpected expenses is a critical safety net. Aim to gradually set aside 3-6 months’ worth of living expenses in a savings account. This fund protects you from accruing debt when emergencies arise.
Learn About Taxes
Understand how income taxes work and how to optimize your filing. Educate yourself on deductions and credits you may be eligible for. File your taxes yourself or use a reputable preparer – don’t rely on tax software blindly. Stay organized with all tax documents.
Explore Investing
Investing allows your money to grow over time. Learn about options like stocks, bonds, mutual funds, and real estate. Understand fundamentals like diversification, risk tolerance, and compound returns. Start small and invest regularly once you’ve gained knowledge.
