It’s no secret that blog titles like this aren’t exactly head turners. For many American consumers, learning about personal finance ranks right up there with trips to the dentist and getting a colonoscopy.
While gaining financial literacy may not always be fun, it can be interesting. And honestly, it’s a lot easier than the other two things mentioned in the paragraph above. So, do yourself a favor and check out this primer that can help you get control of your finances and your future.
Why personal financial literacy is important
The short answer can be found in your local grocery store. The price of almost every commodity has increased significantly in the past year. And it isn’t just food. Inflation in the past year has hit almost every major part of the average U.S. consumer’s life.
Chances are your income has not matched those increases, which can be frustrating. Financial literacy can help you deal with those circumstances calmly and rationally. It can also help you recognize the myriad ways you can generate passive income. Once you do that, compounding makes it become a flywheel effect, making your money grow exponentially.
Finally, financial literacy helps society as a whole. The more people know about handling their money, the stronger the economy becomes.
Resources for gaining personal financial literacy
Personal financial literacy has quite a few layers. So, reading articles on the internet is a good start, but reading books on the subject is better. Deep reading can lead to deeper understanding, a critical aspect of sound financial literacy.
Books also provide a systemic approach to the subject, rather than you piecing it together through articles and videos of dubious quality. The other great resource is a good financial management tool.
Skills for gaining personal financial literacy
The most fundamental skill for gaining control of your finances is a budget. Many people cringe at the thought of building one, and that is understandable. They can seem complicated and restrictive. But that doesn’t have to be the case. A budget can be created that fits your learning style and temperament.
There are a ton of free budgeting tools that demystify the process and meet the needs of almost any personality. Another skill set is investing. Whole libraries have been written on this subject, and there is far too much to cover in one article.
One thing is certain. Making money work is the surest way to wealth, whether starting a business, buying stocks, or investing in some other financial vehicle. One of the best sites to gain investing knowledge is Investopedia.
Beginners, don’t be put off by the front page. Just use the search bar to ask any question you want, and you will be met with a wealth of easily understood information.
The flip side of investments is loans. Again, gaining an understanding of them is crucial. Like investing, there are volumes of information out there. Loans can give you the leverage you need to make money, or they can be a financial millstone around your neck. It’s all in how you handle them.
Here’s a great primer on how they work and how to approach them.
That’s it! In this time of financial uncertainty, don’t get upset; get smart. Even a little personal financial education goes a long way.