Money is crucial in today’s world. Everything has a cost or value, which mostly requires money to get it. As every individual grows, they need more of it.
Now, it is not a shocker that making money is hard. Even if it isn’t for you, you have to make tough decisions on allocating a particular amount to a specific purpose or task every day. I am sure you agree that this is hard, right?
Some individuals get paid or earn money hourly, daily, weekly, monthly, and so on. Others like me, who is a freelance writer, can’t say their exact monthly income and its trends. So, how you use this money to suit your lifestyle while ensuring you save and grow sums up to financial literacy.
So, what is financial literacy?
Financial literacy is the ability to understand and utilize diverse financial skills. This includes personal financial or money management, investing, and budgeting.
Financial literacy defines your relationship with money. Simply put, it is like a building’s foundation. Imagine a building with a poor foundation. Now imagine its fate in the future. You don’t want to suffer that fate. Do you?
So, that building’s foundation is like your relationship with money. The stronger the foundation, the stronger the building, and the longer it will last. You have to build that foundation with vigor and commitment as you continue towards finishing the house.
Just like it takes time to build a good and strong building, financial literacy entails a lifelong journey of learning and unlearning. That’s right; you cannot say you are financially literate after reading two or three money management articles. Or you have saved $20 out of the $100 you earned today!
You must understand how to balance personal finance, financial planning and financial concepts, and their relationship. I know, this sounds hard (it actually is)! However, you should lay down or establish your options to make accurate money management decisions.
How can you become financially literate?
While reading this post, some of you may be asking, “so, how do I become financially literate?” Well, as I said above, this is a lifelong journey. This journey requires a lot of learning to be able to navigate the challenging but critical waters of personal money management.
That’s why you need to understand where you lie now in your financial literacy journey. The solution to this is learning about financial literacy. There are numerous short courses online, like on Skillshare, that will help you learn how to make financial decisions once you subscribe.
Or better yet, why don’t we engage in this journey together? Like most of you, my financial literacy journey is just starting. Thus, I cannot say I am a money management guru. However, I love to share, and I’ll do that with the little financial knowledge I acquire from my daily life experiences. The good thing is, we’ll be learning and growing together in this space!
So, I will be posting three blogs weekly for both of us to dive more into what financial literacy really entails. This way, we eliminate that excuse you already had on your mind on how you can’t afford to pay for a short course. It’s a win for all of us, right?
So, why is financial literacy important?
I cannot stress enough the importance of financial literacy. You cannot make decisions, especially about money, when you don’t understand its dynamics.
Moreover, today’s economic landscape and technological advancements worldwide require you to be prepared for any occurrence. For instance, imagine if you get suddenly cut off from your manufacturing job because a machine has been introduced that will replace your skills. How financially prepared are you for the future? Have you saved? Do you have an emergency fund? Did you invest or have passive income to sustain you while you get back to your feet?
If your answer to this is no or maybe or “what is an emergency fund?” then you are in trouble. It’s a hard pill to swallow, but that’s the truth!
What I am trying to say is; financial literacy helps you understand different concepts related to money management and personal finance. It helps you have the financial knowledge to brace yourself for unforeseen situations and maintain your lifestyle easily.
Finally, you should know that the financial decisions and choices you make today will significantly impact your future wealth and financial well-being or success. Subsequently, how you make these decisions and choices depends on how financially literate you are!