Updated: Oct 21, 2022
First of all, what is financial literacy?
Simply put, financial literacy is the ability to understand financial concepts and use the knowledge you gain to make informed decisions about earning and managing money to improve your life's quality. Financial literacy isn’t always taught in schools, so we have to maneuver as students of the game of life and take control by educating ourselves on personal finance.
How can I improve my financial literacy?
1. Create and follow a budget
One of the first major steps when taking control of your money is looking at your income vs expenses and creating a budget. A budget is a necessary tool to help you understand where your money goes every month. If you don’t know how much money is coming in and going out, it can be easy to say “FoRgeT sAviNg MoNeY” if you mismanage most of the money you earn.
To stay on track, you’ll need to make your budget both accurate and easy to follow. To prevent budget burnout, make sure that your budget is flexible but also restrictive enough that you don’t have to live paycheck to paycheck. If you’re creating a budget for the first time, try the 50/30/20 budget.
Basically, this kind of budget commits half of your income to your needs or essential purchases, 30% to wants or non-essential purchases, and 20% to your future or savings.
There are plenty of tools available to assist you with budgeting like personal finance apps. A lot of these apps are made to help you track your income, expenses, and net worth. When you input your info such as banking, income, expenses & budgeting goals into a money management app, you should start to see your financial choices and habits more clearly.
2. Get Hip To Those Paperbacks
We are students of the game! So listen, I understand you might not like to read but in order to improve in life you’re going to have to do a few things you may not like doing. With that being said, there are many books about money management that you could buy (most of my books came from Amazon!), some books can be found online in eBook format, and you can even find audiobooks and ebooks online for free!
Another thing you may want to do is try finding a good financial blog that hits on important money topics in ‘bite-sized’ portions. Whether you get your money advice sent straight to your email or you buy from a bookstore, getting educated about your finances should be a priority.
3. Consider a class or mentorship
As you get older it’s important to know your learning style. Some people will find that they learn best in groups. If that sounds like you, you may find it beneficial to sign up for an online or in-person financial literacy class or mentorship. This will allow you to improve your money knowledge, meet new people who want to see you win, and have a chance to improve the quality of your life. Just know that whenever you decide to take a class or mentorship, you only invest in people or programs that have enough free game to support the cost of their class or mentorship. Do not get finessed.
4. Join or create a community for accountability purposes
A lot of us start our journey ON FIRE, we have no intention of ever letting up & no one can convince us that we will EVER burn out - We’re here to learn & expand our finances! Although we have great intentions of making smart saving and investment choices, sometimes life gets in the way. You might make excuses and push your financial goals off until ‘tomorrow’. When this happens, having a group of like-minded people to hold you accountable can be helpful. Join our Million Dollar Mindset Club here
5. Understand credit scores
A lot of us think we have great credit if we have a 750+, but that might not be the case if your PROFILE is not in good standing. Trying to wrap your mind around credit scores, credit reports, and credit cards can be complicated, *tap into our DIY Credit Enhancement eBook here* but it doesn’t have to be. Instead, take it to step by step.
Start by learning what a credit score is and how having a good credit profile is a great way to reach your financial goals. Also note, it would be great to learn how to use credit to invest and improve your finances. All three main credit bureaus, Equifax, Experian, and TransUnion, will allow you to check your credit free of charge once a year.
Other services, like services offered through your bank, credit card, or companies like Credit Karma, regularly update your credit score, let you know who is inquiring about your credit, and offer information and advice on how to improve your rating. They might even have credit card recommendations specifically for you.
6. Audit your social media
While you’re scrolling through posts from friends, family, or your favorite celebrities and clothing brands, consider following finance-oriented Instagram accounts that can help with financial literacy. There is A LOT of free game out here. Money advice about life insurance, budgeting, saving, investing, credit, and/or investing for kids pages are great.
Once you start following and engaging with these pages, you’ll see a lot of information started showing up on your feed in bite-sized pieces, which will help you gradually pick up gems over time. Once you’ve followed accounts like these, you won’t have to search for information anymore; it comes to you. Read until the end for a few pages I like to learn from.
7. Invest in your future - you’ll never regret it
When we save, we aren’t saving just so we can have piles of money laying around. We are saving to invest. You could have all the material things you desire now, but if you don’t put any money away, a financial emergency or something like a pandemic causing you to miss out on work can set you back in your financial journey.
It’s in your best interest to look into investment vehicles for the future, first thing you want to invest in is YOURSELF, read books on personal finance, and then pick the vehicle that fits your goals best such as an Individual Retirement Account (IRA), ROTH IRA, stocks, real estate, etc. and invest often. *Tap into our Personal Finance For Beginners eBook here*
8. Automate your bills - it takes the load off + you’ll never miss a payment
When you are in a position to automate your bills, you take away the stress of remembering to pay them, plus you take away the possibility that you might forget to pay and get hit with late fees. *Note that even though you are setting up auto-pay and it is a great way to organize your finances, you might have to look over or adjust them from time to time to make sure everything is going to plan.
9. Pay yourself first - grow your savings
Knowing how to save money is a key part of becoming financially literate. Just like you can automate paying your bills, you should automate a portion of your paycheck to automatically be deposited in your savings account. You can set up an automatic transfer from your checking account to your savings account on a monthly, biweekly, weekly, or daily basis.
Consistently putting money into your savings account shows that you’re financially responsible and you are choosing to be proactive by saving money before you need it. It also helps you ‘look good on paper', so if you ever need funding from the bank, they’ll be more likely to give it to you.
When you put back a little bit of your income now, you’ll be better prepared for life later.
10. Use your downtime wisely
“The problem is, you think you have time”
If you’re spending your free time watching TikTok, YouTube, and Netflix, you’ll miss out on the knowledge you would have gained if you made the choice to listen to a podcast like Earn Your Leisure instead. This is called an opportunity cost. An opportunity cost is a price you “pay” to give up one decision for another. Whether you're driving, cleaning your crib, working out, or laying in bed, you should use your time wisely. Learning how to create time as well as using your “free” time towards gaining knowledge and focusing on setting your foundation can really help you improve the trajectory of your life.
Now that you’ve learned this information you’re probably thinking, “Aight... Now, I know what financial literacy is and what to do, where do I start?” You should start by writing down your “why.” Why do you want to become more educated? Why do you want to improve your financial knowledge? Why do you want to invest? What does the IDEAL life look like for you? Once you have the answers to those questions, then you can work on the physical steps of creating and maintaining your budget and leveling up your finances.
To be honest, it’s straightforward but it is not necessarily easy. It’s a lot of work on the front end to get your finances set up the way you want them to be, but your future self (and future family) will be set and will thank you for the decisions you’ve made and the work you’ve put in.
Information can be very great IF it is used! Make sure you’re not making excuses for yourslf to be lazy with you. Love yourself more today, grind hard today, have faith in our Father & know that He has created you for a purpose. You are here to live MORE LIFE, let’s GET IT!
Some dope pages to follow:
@LTIcapital.Finance @Haitain_ceo @Runway_Billionaire @SleepIsForSuckers @Newt_theentrepreneur @MarvinFrancios__@Haadthebillionaire @ChrisssJohnson @Kriskay.eth @TheWealthDad @ForeverMrsBudget @AFrugalMillennial_ @YouNeedABudget @EarnYourLeisure @Kevinj.dolce @BetterWallet @OfficialCoachKeem @iamsuniajae @longviewfinancialfreedom @Teach.Kids.Money @The.Retired.Millennial