Importance of Financial Literacy | Dollars and Sense

Do you consider yourself a person with good financial habits? If the answer is YES, it means you know the importance of financial literacy. Maintaining good financial management requires time, effort, and organization, a real challenge for most entrepreneurs, who need to perform other roles in addition to managing their business.

Financial education guides us to organize and manage our money. Only financial education can teach us the importance and ways of controlling and reducing expenses, increasing income, saving and investing. The importance of financial literacy is not only vital for individuals but also for legal entities.

Living one step below what you earn is a good strategy

How much money from your monthly income or profit is left over at the end of the month: 10%, 30%, or maybe nothing? If your answer is the latter, then we have bad news. After all, one of the best financial habits is to always try to live a little below what your income allows. It ensures that there is always a reserve left every month to build an emergency fund that will guarantee greater independence. Having a surplus in your budget makes you less vulnerable to unforeseen events.

Writing down all your expenses

One of the problems that prevent people from achieving their financial goals is not having control over their expenses. It is because many people don’t even notice the money leaving. Have you ever been in the situation of finding that your credit card bill came in much higher than expected?

However, even if you analyze the expenses, you cannot understand why the bill was so high. It is when the importance of financial literacy is understood. Write down all your expenses to have a basis for analysis and find the holes in your budget. This is the only way to establish a solid foundation to grow and achieve your goals.

Having more than one source of income is a great strategy

Many people depend solely on their salary to survive. Therefore, they are quite vulnerable if something unexpected happens and they are fired. This applies both to those who earn a minimum wage and to those who earn 15LPA.

If you would know the importance of financial literacy, you would know the importance of establishing a strategy that guarantees more than one source of income to increase your financial independence and create vital safety nets.

Studying finance is essential to achieving goals

Studying finance is most lacking in the country. There are few people who understand the importance of financial literacy and dedicate themselves to understanding how the financial world works. 8 out of 10 Canadians still prefer to invest in Savings rather than investing in more profitable alternatives. Not to mention financial traps such as interest on credit cards, personal loans and the proliferation of negative financial habits.

Set objectives and goals

There is no general rule for setting goals, but creating them serves as a boost for you. It is important that these objectives are realistic. The goal needs to be measurable, achievable, relevant, and temporal. Taking care of money correctly means ensuring well-being on the most diverse levels.

Benefits of financial literacy

Financial literacy is of paramount importance in today’s complex and dynamic world.

• Financial literacy empowers individuals to take control of their financial lives.
• Financially literate individuals can make smarter choices regarding savings, and investments.
• Financial literacy is essential for effective budgeting and money management.
• Financially literate individuals are better equipped to manage and minimize debt.
• Financial literacy plays a key role in understanding investment options.
• Financially literate individuals can make informed decisions about retirement planning.
• For those interested in entrepreneurship, financial literacy is essential.
• A population with a high level of financial literacy contributes to overall economic stability.
• It helps individuals prepare for unexpected events or emergencies.
• Financially literate individuals are less likely to fall victim to financial scams.

The importance of financial literacy

So, did you find this topic interesting? The importance of financial literacy goes beyond just financial control. Financial literacy is a fundamental life skill that empowers us to make informed decisions about our finances. It is a key factor in achieving financial well-being, stability, and success in both personal and professional aspects of life.

Do you want financial advices? Get in touch with one of our financial experts at Adi n Adi Financial. We deliver skills that meet your financial needs!