Financial Literacy 101 (5 Points to Remember)

Financial Literacy 101 (5 Points to Remember)

I have been in the quagmire of wrong-footing because our family has no knowledge and natural habit on proper money handling. It is a general requirement but in my opinion, people have been educated and trained to earn but not to how to use the money earned properly.

It is my advocacy that everyone starting from high school to teach financial literacy. How money is made and saved. How money is increased and multiplied. It is hard work but how to work in order to create money and make money work for you.

All parents like me should teach their children the way to handle money. However, before we teach we should practice what we preach. It is not late even for a senior citizen to revise the way how we use money and how we look at money as a means to give us a good quality of life and as a means to share for those less fortunate.

Many of us are poor not because we are poor but because we do not know how to handle money. Money can easily disappear if we do not be conscious and watchful on how we use money such as the sudden desire something while shopping. Compulsive buying must be put under control. Buying things we do not actually need are but a part of our cultural heritage.

The wrong kind of lifestyle handed down by our parents. Or this is also the result of the bombarded subliminal suggestions of tv commercials, the effect of continuous and aggressive advertisement of companies targeting ordinary people like us.

These rich people and their companies have taken over our lives by submerging us to frenetic consumerism society where life is buying gadgets of this and that that are by most part many of these are but junks and not necessarily including junk food. We are led to believe the comfort level of buying things is the way to go in this rat-race society.

This is the time to start the different road of thinking and way of life. The issue is not about money in fact it is about how we value money and our literacy of how to handle our finances. To create a new whole lifestyle in the treatment of our hard-earned money MUST be changed urgently.

In this connection, I love to share with you the points of which we need to practice as we learn the below important and fundamental knowledge and practice new ways of thinking and doing with our money.

When I say our money, it comes from our salaries, loan, the income coming from a pension, monthly remittance of your children, from your small business, rentals, and all.

Here are important Financial literacy Pointers 101.

1. Understanding financial literacy

It is about the knowledge and skills of how we handle money effectively and efficiently. Not knowing how to handle money means useless earning and useless effort for at the end of the day whatever you earned goes out the drain for lack of knowledge and understanding especially if your society has a collective culture of one day millionaire mindset.

Or in one culture I know the sky is the limit and tomorrow lost all our grip. Without financial literacy there is always a great risk to lose money due to wrong decisions on money management, spending and use. It is needed therefore to understand how to spend, manage and use money, when and why they have to use, spend them and know the importance of savings and investment

Financial literacy helps every one especially the average income group and below particularly those who have problems in handling money regardless of the monthly income the persons receive a month.

Learning the places and the time to buy and to properly care for your provisions and possessions.

There is always a place cheaper to buy your necessities than the rest in your area. Sometimes there are items the cheapest in one place and another cheapest on one thing in another place. The time of buying should coincide with sales like annual sales, Black Friday, Market Day, etc.

I advise you to know the Bus No. of places you need to go to. Do not use your car unnecessarily if you have one. Treat things like the way you wanted to be treated. Don’t get me wrong it is not because of being materialistic but because it helps the life span of your possession including your equipment and appliances.

Take some time to read the product manual of each appliance, gadget and your car so that you will clearly know how to keep them in their optimum performance and life span and prevent going to repair shops for any of them. That is a great saving in expenses as well

2. Handling of money

It is not how much you earn each month. It is how much is left at the end of the month. That is the purpose of budgeting for me. Delayed gratification is important. The reality check is that we have to prepare for the future in order to be in control of life. If we have negative instead of positive savings, our life will be under the mercy of circumstances, debtors, and financial institutions.

In effect, we will be like a slave of paying surcharges, interest rates additional charges on your payments which are basically an extra burden without any positive and future advantages. We will just become the milking cow of the rich and lending institutions.

The basic of the budget is to adjust the money earned to our monthly expenses. Expenses must include food and drinks, entertainment, bills for electricity, heat, water, internet, and mortgage, payment for loans. Emergency funds and maintenance.

Above all before giving a portion to each expenses, keep away a minimum amount for savings, I call the black hand. The white hand are your daily expenses and allowances. It takes a while and a little of adjustment with some sacrifice to fulfill the money handling per month well.

3. Learning the importance of savings and the difference between savings and investing

Savings of an earning a month should be what should be left every month. I have mentioned the way to handle money each month is to leave a saving.

Most of the time, it is a matter of strong will to keep something every month. Many of the population’s habit of spending as long as there is left in the pocket until it’s time to find out even in the early part of the month, money is consumed. Zero is left behind, so a credit card is misused. It is easy to ignore emergencies, retirement, sicknesses when it is not there.

People always think everything will be alright and they put their lives on these circumstances so no wonder they find themselves in the most challenging situations. Wisdom dictates to save for the rainy days.

To save each month is a habit we can practice and should become a part of the monthly habit. Savings is good investing in blue-chip companies in the form of shares and stocks could be life-changing and it could help you grow faster in wealth and in financial security, Learning financial literacy helps one to understand the meaning of Calculated risks in investing and in creating business. One of which is Affiliate marketing, MLM, and direct selling.

4. Taking care of one’s documents, and online safety of one’s finances and identity

In today’s reality, we normally deal with and transact online. It is unavoidable because a lot of companies compel us to deal with them online. Anyway, it is the most comfortable and most efficient to finish our transactions and business commitments. So it is important to understand safety precautions and security. The ways and means to establish full proof ob how to keep out the financial records, documents, personal information and many more safe at all times so It is imperative to start inquiring all the safety measures. Safety and security should be the paramount concern of each individual. Protect your online transactions and data.

5. Learning the difference between good debt and bad debt and good credit and bad credit

Debt used for investment that gives back Return of investment ROI and extra income is a smart debt which I called good debts. This a debt that makes money for you and being able to return the debt in due time without coming from your own other sources of income. Bad debt is having to pay it without the wise use of the debt taken and has only created a financial burden. Good credit is an asset but we all know that it is not that easy. It is easier to end in bad credit and everyone knows it is not that easy to put back one’s standing into good credit. Credit is important because it spells trust and confidence from lending institutions on you and it is easier to get loans than those who do not have good credit. To learn the differences of these points are important for your future stability

 

Additional Advice:

Have the habit of updating and endeavor to have Continuing Improvement on Knowledge and know-how in creating different sources of income. Learn opportunities in creating extra income. It is always good to have several streams of earnings than not to be conscious of doing it.

 

Author: Florentino Cruz

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