Developing financial literacy

To be financially independent, you have to be financially literate. Find out how to develop financial literacy

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It is never too late to improve your knowledge about financial matters. Increase your knowledge about investing, estate planning, social security, how credit cards work, credit scores, saving for the future, real estate, insurance, retirement and taxes. Tackle one topic at a time. Start with the one you are most interested in learning and begin to build a solid foundation of financial know-how.

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Read newspapers and magazines

Read newspapers and magazines geared toward money matters. Begin to read the financial section of your local/regional newspaper. Also, read finance and business newspapers which provide insight into the domestic and global world of finance and business.

Search the Internet

There are many online resources to increase your financial literacy. Many of the cable news networks have websites with a finance tab. Some educational resources provide tutorials that can cover single topics.

Take a financial literacy class

Take a class at an adult education centre or junior or four-year college on subjects that will help you learn how to manage your finances. If you prefer to stay at home, take a course through an online college. There are also a multitude of self-help books and workbooks that teach finance and personal money management.

Listen to talk radio

There are many syndicated (and locally based) radio talk shows that offer financial advice. Learn from callers’ questions and financial dilemmas. However, be aware that some radio shows are actually infomercials promoting services or products. Always double-check (and triple-check) any financial advice being offered.

Purchase financial tools

Buy a financial calculator. A financial calculator performs functions such as calculating loan payments, interest rates, percentages, amortisation schedules and cash flow. They also solve time-value-of-money calculations such as annuities, mortgages, leases and savings.

You should also invest in a financial dictionary such as Dictionary of Finance and Investment Terms, Standard & Poor’s Dictionary of Financial Terms and Webster’s New World Finance and Investment Dictionary, among others.

Understand the ‘Cashflow Quadrant’

Most people don’t know that there are four broader ways of making money – employment, self-employment, business and investing. It’s like a ladder; you can work your way up to being an investor, but you need resources and specialised knowledge to do well in that field. As Warren Buffet said, a better business owner makes a better investor.

Ask for expert advice

Talking to an experienced advisor can help people understand how to budget and save. An advisor can also look at how to handle credit and debt and make suggestions on how to pay off, consolidate and manage finances with a plan to achieving a goal.

Start an investment club

The purpose of an investment club is to learn about investing in stocks and to make returns on investments. This is a long-term commitment to a group of 10 to 15 individuals who want to learn about the stock market through investments in stocks.

Utilise your network to help you achieve your goals

Whether it’s a podcast, webinar, e-book or blog, there are thousands of educational resources to help us improve on our personal finances. While these resources are valuable, don’t ignore the opportunity to gain expert advice from your immediate network. Utilise the knowledge (and lessons learned) from your circle of influence – successful friends, family members or even your boss.

Help your kids to learn

Open a savings account and teach your kids how to save. Starting to learn about money management when young is key to improving financial literacy as an adult.

Watch financial information TV offerings

Watch television programmes offering financial information. Beware, however, as there are many infomercials on television touting ‘get-rich-quick schemes’ too. A general rule of thumb is if it sounds easy to make lots of money quickly, then it’s probably an infomercial.

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