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Financial Literacy: Why It's Important and How to Improve Yours Thumbnail

Financial Literacy: Why It's Important and How to Improve Yours

Financial literacy is one of the most important skills to have, but it’s not a skill commonly taught or talked about in schools. Many individuals struggle with understanding how to manage their own personal finances, reduce debt, plan for a comfortable retirement, and decipher the stock market. Fortunately, there are an abundance of resources readily available to you, which you can utilize to help you improve your financial knowledge.

What is Financial Literacy?

Financial literacy focuses on the ability to make sound financial choices and confidently manage financial matters. This entail the possession of skills and knowledge that allow an individual to make informed and effective decisions on various personal finance topics including budgeting, retirement planning, taxes, investing, real estate and paying for college.[1]

Essentially, financial literacy is the ability to determine which financial decisions are most likely going to lead you to reaching your financial goals, and then acting on that knowledge.    

Why is Financial Literacy Important?

Financial literacy is crucial as it equips you with the knowledge and tools needed to make strong informed decisions. Without it, the financial decisions we do make, or don’t make, can potentially threaten your financial security. 

Ways to Improve Your Financial Literacy

As eager as you might be to become more financially literate, it won’t happen overnight. It happens through both personal experience as well as continually exposing yourself to new ideas and other’s perspectives. Wherever you are on your financial journey, here are 5 ways to improve your financial literacy.

Listen to a Podcast

With the ability to listen to great content regardless of where you are/ what you’re doing, it’s no mystery why podcasts have become so popular over recent years. Not only are podcasts educational, but they can be fairly entertaining as well. There are plenty of podcasts offering financial tips and tricks, advice, and personal stories to help you manage your money. Check out this article from Forbes to explore 9 Money Podcasts that are worth a listen

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 Pick up a Book

If you’re one of the many people who don’t read on a regular basis, you might me missing out. Making reading a regular habit comes with a ton of benefits, one of which is boosting your financial knowledge and improving your understanding of money and the markets. Whether you’re looking to eliminate your debt, increase your savings, or start investing, there is a book for you. Check out these 10 best personal finance books of 2020. 

Utilize U.S. Government Resources

The Government has devoted multiple efforts in ensuring that citizens have ample opportunities to improve their knowledge on personal finance subjects. Congress even declared April as “Financial Literacy Month”. [2] One good place to start is MyMoney.gov. This site teaches the basics of financial education and provides advice on various subjects including saving & investing, buying a home, investing in a 401(k) and more. 

Speak with a Financial Advisor

A financial advisor is a professional whose role is to help individuals lay out a roadmap to achieve their financial goals through effective investment and financial planning strategies. An advisor can answer your financial questions, whether it be questions about simple everyday money situations or more complex long-term matters.  Read our blog to understand some of the top reasons that individuals decide to work with an advisor. 

Knowledge is power 

The key to improving your financial literacy is to just start! With strong financial literacy, you’ll have more confidence in money management and will feel more in control of your finances.