According to OCED, “Financial education is increasingly important, and not just for investors.”.
As per a research published in the TIME magazine, people with low levels of financial literacy suffer from that lack of knowledge at every stage of their lives.
Additionally, people with a high degree of financial literacy are more likely to plan for retirement, and that people who plan for retirement have more than double the wealth of people who don’t; this was concluded in another study from the TIAA-CREF Institute.
The study also conversely concluded that people who have a lower degree of financial literacy tend to borrow more, accumulate less wealth, and pay more in fees related to financial products. They are less likely to invest, more likely to experience difficulty with debt, and less likely to know the terms of their mortgages and other loans.
With the growing sophistication of the markets, the cost of this financial ignorance is high, as it results in incurrence of unnecessary charges due to overspending their credit limit, making late credit card payments or paying only the minimum amount due, without proper personal cash flow in place which further gives rise to more debt.
However, a few steps can be taken while making financial decisions which can help avoid long-term blunders. Financial expertise takes time to be attain but it’s never too late to start honing your financial literacy. Here are a few tips that you can practice in your day-to-day dealings.
Network: Try to find and connect with a professional financial advisor that is knowledgeable, that you can trust, and with whom you can work comfortably. They cannot make all your decisions, but they should be able to help you put your situation into perspective and help you evaluate your options. Professional social media platforms such as LinkedIn provides massive scopes of expanding your network.
Get Involved: Do the easy things. Participating in your company’s retirement plan, starting to save early for future expenditures like weddings, children’s education, property purchase. You can also accumulate savings by enrolling for a direct deposit of your paycheck, and using some form of automatic savings. Talk to your bank manager to get more details about this.
Watch what and where you spend: Try to develop good financial habits. Just paying attention to how you spend your money will probably lead to some ideas about how to save more.
Plan it out: You can have a simple 5 or 10 year financial plan drafted out for your reference and break it into smaller, workable pieces to be tackled at a time. Insurance, for instance.
Finally, it’s never too late to start watching out your cash-flow and making the most of your income. The best cure for financial anxiety is to be informed as the responsibility and risk for financial decisions will have a major impact on an individual’s future life.