In a world where financial decisions are crucial in shaping our lives, it is surprising how few of us receive a proper education on managing money.
In fact, nearly half (45%) of UK adults lack confidence when managing their money, according to MaPS’ 2021 Financial Wellbeing Survey.
This lack of financial literacy can lead to unnecessary stress, debt and missed opportunities. Our comprehensive guide will take you through the steps to become financially literate and empower you to take control of your financial future.
What is Financial Literacy?
Financial literacy is a key stepping stone to making informed and responsible decisions about money. It involves understanding concepts like savings accounts, investment accounts, financial planning, credit card debt, loan payments and much more.
Building your financial education from scratch might seem daunting, but splitting it up into manageable steps can make the process enjoyable and rewarding.
1. Chat with Friends and Family
Begin your journey by having open conversations about money with your friends and family. Sharing experiences, successes and even financial mistakes can provide valuable insights.
You will find that many people have been in situations similar to yours and can offer practical advice. You never know, they might owe money on their student debt or overdraft too. It is important to be open about money so you don't feel ashamed, alone or guilty about your money worries.
Discussing money matters helps normalise the conversation around personal finance, making it easier to seek guidance when needed.
2. Follow Personal Finance Bloggers
The digital age offers a treasure trove of knowledge at your fingertips. Seek out finance bloggers who explain complex concepts in simple terms. For example, the Polar Credit blog is filled with articles about money management and building financial stability.
Personal finance blogs often provide tips, tricks and step-by-step guides that cater to beginners. You can access this information on their website or by following blogs on social media, such as Instagram and Facebook. That way, you get a small amount of finance information daily while scrolling through your feed.
Whether it is setting up bank accounts, creating an emergency fund or learning to save money for a long-term goal, these blog accounts can be your virtual mentors.
3. Take a Course
Enrolling in a beginner's financial education course will fast-track your understanding of money matters. Many online platforms offer free or reasonably priced courses that cover a wide range of topics.
These courses break down complex financial concepts, allowing you to learn at your own pace. You will find courses on managing debt, investing, retirement planning and more. You can learn why it is important to make more than the minimum payment on your credit card and how to build up some extra money in your emergency savings account.
4. Start Reading Finance Books
Books are timeless sources of knowledge, and the world of personal finance is no exception. Look for books written for beginners that cover various aspects of managing money. From understanding personal loans to decoding investment accounts, these books provide in-depth explanations and practical strategies you can implement.
5. Try Implementing What You Have Learned
It is time to put your financial lessons into action. Take a look at your bank statements, evaluate your unexpected expenses and look into opening a savings account to expand your financial prospects.
You can't possibly learn everything there is to know about money in one sitting. It takes years of trial and error to find what works for you and your everyday life. So, keep up with your education, and your financial literacy will gradually improve.
Once you are comfortable with basic concepts, you could even consider looking into investment accounts. Investing can help your money grow over time and secure your financial future. But remember, start small and thoroughly research before making any investment decisions.
Keep up with your financial education
Becoming financially literate is a journey, and starting with zero knowledge is perfectly okay. By gradually familiarising yourself with terms like credit card debt, loan payments and good credit rating, you will gain confidence in managing your money effectively. Don't shy away from learning new money lessons, whether it's from friends, family, bloggers or experts in the field.
Remember, your financial future is in your hands. Every step you take towards understanding money better builds a strong foundation for a secure and prosperous future. Keep learning, keep growing and take charge of your finances with the knowledge that you are making the right decisions for your financial well-being.
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