Financial Literacy Jan 27th

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Financial literacy refers to the ability to understand and use a variety of financial skills and concepts, such as personal financial management, budgeting, and investing. This is a personal skill that benefits you throughout your life because to be financially literate is to know how to spend, borrow, save, and invest money wisely and responsibly. Being financially illiterate can lead to poor financial choices which can have negative effects on an individual's financial well-being. Today, we will take the initiative to self-educate and expand our financial knowledge, as this is not often taught in schools.

The Standard & Poor's Global Financial Literacy Survey is the world's largest and most comprehensive global financial literacy measurement. According to their 2014 survey, 33% of individuals around the world are financially literate, indicating that over 3.5 billion adults worldwide lack a basic understanding of financial concepts. The majority of them live in developing countries. But, even in some of the world's most developed financial markets, lack of financial literacy is a serious worry that must be addressed.

Reading is one way to start on the right track with your money. You've probably heard of Robert Kiyosaki's "Rich Dad Poor Dad" and there's a reason it's been so popular for more than two decades. Kiyosaki shares that he had two different types of financial education when growing up. The poor one from his father and the rich one from his friend's father. Poor dad taught him how to become poor but the rich dad taught him that you don't need a lot of money to get rich. All you have to do is accumulate assets, limit liabilities, and understand that schools won’t teach personal finances to kids.

Budgeting is one of the primary aspects of staying on top of your finances. The 50/30/20 rule is a popular method which means allotting 50% of your after-tax, take-home pay to your needs, 30% to your wants, and 20% to your savings. We must also remember that we should live below our means. This means we shouldn't spend more than we make. Fit our lifestyle and adjust our budget when necessary.

Savings is an important part of smart planning. A 3-6 months' worth of emergency funds protects you in the event of a financial emergency. You can also save for specific purposes like paying for college, traveling or retirement. This can assist you in paying for big purchases, avoiding debt, reducing financial stress, leaving a financial legacy, and gaining a stronger sense of financial freedom.

Saving and investing are both important, but if you want to be wealthy, investing is the best strategy. Interest rates, price levels, diversification, risk reduction, and indexes are financial topics that you have to learn to ensure positive results. When you invest, you allocate resources, usually money, in the hopes of making a profit or producing an income. You can invest your money in a business, real estate, and stocks. The returns can become your source of passive income.

Traditional banks provide very low-interest rates, so keeping money in the bank will not give you more money. Investing is a good way to put your money to work and potentially increase your wealth. By investing wisely, your money may be able to beat inflation and grow in value through interest earned. The power of compounding and the risk-return tradeoff are the primary reasons behind its higher growth potential. An example of this is Jason DeBolt. He began buying Tesla share stock at just $7.50, and now he’s retiring at 39 years old with $12 million worth.

“Without financial literacy, divorce rates soar, families rupture, and women stay with abusive men for financial security. A lack of jobs contributes to riots and illegal activity. Name any situation and it goes back to money. We need to focus on poverty eradication.” – John Hope Bryant, financial literacy entrepreneur, and businessman.