What is financial literacy?

Financial literacy is the ability to understand and use a variety of financial skills including personal financial management, budgeting, and investing. It also means understanding certain financial principles and concepts such as the time value of money, compound interest, debt management, and financial planning.

Acquiring basic financial skills can help individuals avoid poor financial decisions, become self-sufficient and achieve financial stability. Among the most important steps on the path to financial literacy is learning how to budget, track expenses, pay off debt and plan for retirement. This includes learning how money works, setting and achieving financial goals, and overcoming financial challenges that life presents.

How to manage your money?

Proper management of your finances should be a priority and guide your daily spending and savings decisions. Personal finance experts advise taking the time to learn the basics. Managing your money requires you to constantly watch your spending and accounts and not live beyond your means.

The development of financial intelligence begins with the opening of a bank account. Once you have a paycheck, set up direct deposit. So your money is safe and you don't have to pay interest to cash lenders who charge a percentage of your check.

A bank account offers convenience, access to a range of benefits and security. Checks and debit cards provide proof of payment so you have a record of transactions that shows where your money is going.

Most people opt for a checking, debit or savings account, or a combination of these accounts. This allows you to set up automatic payments for monthly bills and not have to carry cash with you. Each option has certain advantages and disadvantages. Find out about the various overdraft, monthly, withdrawal and other fees associated with different accounts.

Experts recommend a savings account that you can use for unexpected financial expenses and emergencies.

Choosing to open only a checking or savings account can be a poor choice, because separating the two types of accounts helps distinguish between money that is available for immediate spending and reserves that are to be invested for the long term. Keeping all your money in a checking account means your savings are easily accessible and can be spent immediately. With a savings account, you miss out on the interest earned on the account.

If the money is in an account, you can spend it. Learn to distinguish between necessities and luxuries.

Financial literacy and personal financial planning

How to get started with budgeting? Quite simply. You need to look closely at what you spend your money on and figure out where your financial holes are.

Write in a notebook or mobile app whenever you spend money. Be conscientious in doing so, because it's easy to forget that. This is the basis for your budget.Fixed expenses are those that occur every month: Rent, mortgage, car bill, electric bill, water bill, student loan repayment. Variable expenses are costs that go up and down each month: groceries, pet supplies, haircuts, concert tickets, gambling at new online casinos Switzerland and so on.

After three months, calculate how much you spend on average per month. And take a look at the categories.

This is where most people tend to overspend. Consider what you enjoy most about these monthly expenses, so that you feel they are worth it? And which ones you can really do without? Be honest, and start cutting back. This is the beginning of the difficult decisions.

An important part of budgeting is that you should always pay yourself first. That is, you should put a portion of each paycheck into the savings account. If you make it a habit, in many cases it will literally pay off for life.

Start making necessary cuts in your fixed and variable expenses. Decide what you want to save every week or every two weeks. The money left over is the amount you have to live on.

Effective budgeting requires you to be honest with yourself and draw up a plan that you can actually stick to. The more time and effort you put into your budget today, the better you'll be able to save for a lifetime.

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