Financial literacy is the term used to describe an ability to understand and use a variety of financial tools and skills. These include personal financial management skills such as making investments and budgeting.
Many people find dealing with money to be challenging and even intimidating. However, by pursuing a strong financial education, people can become adept at managing their own finances and may find themselves much better off.
Jerry Cole – Red Rose co-founder – is the Director and co-founder of Bixie, an app designed to empower women through better financial literacy and the provision of a wide range of tools.
Budgeting
As Jeremy Cole knows, one of the most fundamental financial literacy tools anyone can learn is how to properly budget. Creating and maintaining a budget can help people to stay on top of their finances and remain accountable for their spending.
A budget is not just for people struggling to make ends meet – anyone can benefit from having a solid knowledge of where their money is gong and in what areas there is potential for making savings.
A good budget starts with being honest about current spending habits and accounts for treats and extras as well as the basics.
Understanding Financial Products
In an increasingly digital age where cash is rapidly becoming obsolete, it is more important than ever before for individuals to attain financial literacy. Other products – such as loans, mortgages, health insurance and other financial products – are also increasing in importance.
Learning to understand how these work is an essential life skill. Anyone looking to use any form of credit – such as a credit card, personal loan or mortgage – will benefit from having the knowledge to be able to compare products and source the best line of credit for their needs and circumstances.
Financial Illiteracy
Despite research that shows the importance of financial literacy for long-term success, a large percentage of the population of the world remains financially illiterate. This is not restricted to developing nations – an estimated two-thirds of Americans can be defined as being financially illiterate today.
Fortunately, the internet can provide help for many. With online access, almost anyone can find free tools and advice to improve their financial literacy, better understand the terms used and the products available, and make the most of their personal finances.