Trade wars, inflations, global labour shortages, etc.. are big threats to everyone’s financial security. Millennials are unable to afford housing like their parents were. Working 9-5 is simply no longer enough. That’s why learning personal finance is so crucial. It teaches investing, budgeting, mortgage, credit scores, etc. in a scientific, fool-proof way. It not only could help someone save up, but also could take them closer to a much earlier retirement.
What Is A Personal Finance Class?
These are classes that focus on how to manage the money of an individual or a family. They’ll break down banking, budgeting, insurance, investments, savings and more for you. Finding a way to study finance online can be a great way of getting back to basics and truly having a comprehensive understanding of how money works. It’ll help you identify your financial goals and build a plan to meet them.
But just why is financial literacy important to learn about? That can be hard to understand, particularly if you’re brand new to the world of money. Here’s why.
1) Income Management
Getting your first paycheck can be exciting. But if you don’t watch that cash carefully, you can wake up one day to find it’s all trickled out of your account. If you learn how to manage your income properly, you’ll make sure you don’t overspend or spend too much on items you don’t really care about. Using an online expense tracker is a great way of upping your financial literacy in this area.
2) Budgeting, Spending and Saving
To save lots of money and use your paycheck wisely, it’s important to earn enough, but it’s also important to learn how to manage those earnings. Gaining financial literacy will help you understand what to do with your money once it comes in and learn to live within your means. What you’ll learn in an MBA finance online course or other financial education setting will let you make sure you always have enough to cover the essentials, save for long-term goals and spend on a few luxuries that you really care about.
3) Keeping You Out Of Debt
Debt is a pitfall that so many people fall into. Of course, taking on some debt can be necessary to complete certain life goals, like getting a degree or buying a house. But debt when left unmanaged can wreck your finances. That’s why it’s so important to have financial literacy in this area. Learning to manage your credit score, when to use your credit card and when not to use it, and when debt just isn’t worth it are all great skills to have in your toolkit.
4) Grow Your Assets
This is more of a long-term goal than some of the others, but if you know how to do it before you start, you’ll have a much easier time of it. If you learn the ins and outs of terms and conditions, how to read contracts, the secrets of stocks and shares and more, you’ll never waste money or time chasing after assets that don’t really matter. You’ll be able to stockpile investments, gaining multiple income sources and ensuring you’re as secure as possible.
5) Security and Peace of Mind
It can be a rough, unpredictable world out there. Once you leave college, you’re going to have to know how to steer your financial ship against the worst of storms. Whether or not the economy is in the best of health, you’ll have to know how to look after you. If you want to make your finances work for you, you’re going to have to plan for them and learn about them.
Steps To Starting Financial Success
So how do you get started on all this? What are some simple, easy ways you can increase your financial literacy today. Finding a way to study finance online is the best long-term solution to this, but we have some pointers on how to get started here.
First, every time you spend money for the next two weeks, write down how much you spent and what you spent it on. Then gather all your information together and compare it to your income. Are you spending more than you’re earning? Are there things you’re spending on that don’t really matter to you? Now you know.
Next, set up a budget that accounts for all your necessary expenses. As soon as you get your paycheck, pay for things like food, gas or electricity first. That way you’ll always know you’ve got them covered. Whatever is left over can be spent on fun things.
Finally, set up a separate savings account from your usual checking account. Put any money that you’re trying to save in there. It’s an ‘out of sight, out of mind’ trick; if it’s not where your day-to-day spending is, you’re much less likely to spend it.
Of course, when it comes to financial decisions, it’s always important to do your own research. But these simple tips and pointers are a great start on your journey to financial literacy. Learn the secrets behind your money today with an online expense tracker or finding out how to study finance online, and make that bank account grow.
- “9 Reasons Why Personal Finance is Important”, Financial Wolves, accessed 9th April 2021, https://financialwolves.com/why-is-personal-finance-important/#What_is_Personal_Finance.
- “Why financial literacy matters more than ever”, Financial Times, accessed 9th April 2021, https://www.ft.com/content/e25ce66e-b639-408b-b7ef-f524d664a30d.
- “The 5 Key Components of Financial Literacy”, FastWeb, accessed 9th April 2021, https://www.fastweb.com/student-life/articles/the-5-key-components-of-financial-literacy.
- “The five key components of financial literacy”, Bungalow, accessed 9th April 2021, https://bungalow.com/articles/the-five-key-components-of-financial-literacy.