Financial Literacy: What's in it for you?

Financial illiteracy is our biggest enemy in Zim. (Photo/ The Herald)

Often times the ideology of financial literacy is taken lightly. In most cases it is generalized to just knowing money. It is often associated with getting a 9 to 5 job which pays a minimum wage and get you a mortgage, take a loan for a car and buy household basic necessities

What is financial literacy

With the aid of association, I have begun to learn that being financial literate is not only about the basic knowledge of money but rather it entails the ability of knowledge and application to various financial skills. It is about understanding many financial instruments such as stocks, bonds, etfs and the capability to create and manage investment plans.

Financial literacy refers to the ability to have a financial plan and managing it for a long-term. It is the discipline of having a goal and sticking to it regardless of factors that may come in the way.

Financial literacy is a challenge, and it won’t be solved overnight. The path to attaining the pinnacle of financial education is to take small steps, which further turn into strides and leaps.

Why financial literacy?

Financial literacy intends to help better manage your finances, chiefly your salary, revenue, interest income, profit or even debt, in a manner that avoids exposure to financially crippling eventualities you cannot cope with.

An individual who has financial literacy is more equipped to make the wise choices that they must make on a daily basis. These choices have a significant impact on the lives of the individual as well as the family members who are either directly or indirectly dependent on them.

Financial literacy is the road to financial freedom. It ensures that individuals learn how to better manage their salary by at least doing the following:

1. Budget

2. write list of things before going shopping to avoid over spending

3. have an emergency fund. it will be the good Samaritan tomorrow.

4. Avoid or minimize debt.

5. Don't borrow someone money you are not willing to lose

The goal of financial literacy involves an individual’s ability to manage their day to day finances while also taking a long term financial goal for the future.

Why have financial literacy skills

What Is Financial Literacy & Why does it Matter. (Photo/ medium)

1. Financial freedom

Everyone aspires to be financially stable and independent, but doing so takes understanding of topics like credit, debit, saving, inflation, investment, etc. Until you acquire this knowledge, you will have a difficult time navigating a society that is unjust and harshly penalizes those who lack it. So make an investment in learning, and it will certainly pay off. Investing in knowledge surely pays the best dividend.

2. Sound financial decisions

The choices one takes on a daily basis while investing or spending hard-earned money heavily influence how one manages their finances. Any such choices, if not made with sufficient knowledge at hand, can have a significant negative impact on an individual's and their family's financial health.

Therefore, it is essential to have the fundamentals of budgeting, saving, cost management, and investing in place since they enable one to become skilled at managing finances and maintain a stable and healthy financial position.

3. Become a part of developing the next generation of "Financial Warriors"

A person who is financially literate can serve as an example for the younger generation and will undoubtedly be a "financial warrior" since they will have the principles, the know-how, and the practical financial understanding necessary to handle any situation that arises.

Anyone who is interested in learning about finances, not just the next generation, may get a lot from this. There won't be a lack of role models because all it takes is a tiny spark to start a fire!

You have the right to be financially independent, but in order to achieve that, you must prioritize and never fail to educate yourself on basic financial concepts. Start with fundamentals like:

What is Money?
How does money work?
What is budgeting?
What is Savings?
How to track income & expenses?
What is inflation?
How to hedge against inflation?
What is compounding?
What is a portfolio and how to diversify it?
What is risk and how to analyze it?

If doing so makes you feel lethargic, find someone who can offer you regular advice.

I can tell you that improving your financial skills will be very fruitful and gratifying.