S1E3 Expand Your Financial Knowledge
There’s no doubt about that.
How well you understand money and its components can play a crucial role in achieving success. With proper financial education you can make better financial decision.
1. You will know the importance of keeping a budget.
2. You will know why you must save at least 20% of your salary every month.
3. You will understand the different funds you should own throughout your life span (i.e. emergency fund, opportunity fund and retirement fund).
4. You will be able to choose and assess the right vehicle to invest.
5. You will learn to create smart financial goals and achieve them one by one.
6. You will understand ways to grow your salary and not just rely on one income.
7. You will enhance your overall money management skills.
8. You will be able to manage your debt better or more so be debt-free.
9. You will be a conscious spender, assessing your spending habits effectively.
10. And more!!!
Ultimately, financial literacy can help all of us become better stewards of our finances.
If only we were taught about how money works, how to save, how budget and how to invest when we were young.
Then maybe the moment we received our first paycheck, we’ll know what exactly we need to do.
Here’s what I firmly believe in:
The more you know… The better you will be when it comes to your money.
What is Financial Literacy
Financial literacy is the understanding of money and everything in between including budget, savings, debt payment, retirement, investing and making money on the side.
A financially literate person is someone who sets goals, plans his/her actions, budgets, saves, invests and accumulate more wealth than debt.
Someone who has no problematic credit card debt or loans.
Has savings or an emergency fund ready.
Maintains an investment portfolio for his or her retirement needs.
And does not live on one income alone.
Sadly, many Filipinos are still seen as “financially illiterate”.
According to a statement made by Bangko Sentral ng Pilipinas, Filipino adults can only answer three out of seven financial literacy-related questions. This poor financial literacy among Filipinos begins with poor childhood education that persists until adulthood.
Why Financial Literacy is the Secret Key to Growing Your Money
Financial Literacy is such an important aspect to achieve your financial goals. You are creating the very blueprint of your financial life.
Learning about it has a huge impact in our life mostly for the following reasons:
Reason #1. Understand the value of money
The first reason why financial literacy should be taken into consideration is it can help us understand the value of money as a tool.
Money is a strong resource for a man. It can buy power or prestige. Unfortunately, money can also bring hatred and greed.
That’s why learning how to correctly spend your money is important. You have to be equipped on how money works if you want to really develop your path to financial freedom.
Financial Literacy is not only centered on budget, savings, investment and others.
Proper spending is also discussed. Once you’ve mastered how to properly consume money, you will adopt true discipline to be the person that you wanted to be.
No longer will you waste your money on expensive things. Instead, you will be able to prioritize your needs versus your wants.
Reason #2. Teach us how to better manage our finances
Managing one’s money is a personal skill.
And just like any skill you need to develop it day by day. You have to be willing to learn.
When you become financially literate you are able to manage or handle your money better.
- You’ll know how to set up a budget that works.
- You’ll understand the concept of emergency fund.
- You’ll avoid debt as much as possible.
Money will no longer control you but you will have full control of your money instead.
Reason #3. Releases us from poverty mindset
Poverty mindset is the “poor me” attitude towards money.
It is commonly characterized by being always in the state of lack.
Have you ever met a person who constantly says “wala akong pera” or “hindi ko afford yan”?
Someone who always answers negatively to what you suggest or say he or she should do?
Those who only see the things that they don’t have instead of being thankful for what they have.
Worry is a natural feeling. However, there are those who overly worry about money that it greatly affects their ability to be rich.
The moment we learn to manage our money and expand our financial literacy, we begin to graduate from poor mentality to abundance mentality.
We are no longer focusing on what we don’t have. Instead, we will be able to utilize our strengths to accumulate wealth.
5 Ways You Can Gain Financial Knowledge Today
Now that we’ve discussed how important expanding our financial literacy is, here are five ways we can easily gain them.
You may be blessed with parents who have been very well in terms of their finances or just mere acquaintance that you know are good influence. You can engage in communication with them and ask for their success stories. How they manage their money and how they were able to survive the day to day living.
2. Finance blogs
Blogs are just the 21st century authority.
Whenever I search something especially reviews and experience on a financial product I will consult other blogger’s account. I guess it adds that blogs have a personal touch.
3. Finance books
I started falling in love on the topic of money, finances and business because of books.
Every time I stroll in the mall I will always grab a quick visit on the bookstore and spend an hour just browsing for books in the business and investment section.
Just recently I fell in love with Rane Panaligan’s The Law of Leverage as it is an all in one book.
Need book recommendation? Check these 18 Books on Personal Finance, Productivity and Self-Help
4. Finance Magazines
From Entrepreneur, MoneySense to Good Housekeeping… these magazines include financial tidbits that could help you gain financial knowledge.
If you are easily bored with long passages of books then maybe a magazine style will be better. You can just browse this when you have time and you’ll be good. This also appears to be more on the visual side.
5. Financial Seminars
The best way to gain financial knowledge will most probably be attending seminars.
In seminars there will be a focused topic that you’ll enjoy learning with the others. You will be listening on a financial educator that can be your mentor too.
Financial seminars here in the Philippines can be mailap and even pricey but they are all worth it.
Attending talks and workshop is actually smart so you can start applying the concepts too. I love attending seminars even if not financial related.
Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at firstname.lastname@example.org