The concept of financial literacy is always a hot-button topic in the UK, particularly with schools unable to effectively teach the finance management lessons that were first mandated by the government back in 2013.
There remain huge concerns about a fundamental lack of financial literacy in the UK, with as much as 50% of the British population considered to be fiscally vulnerable. Worryingly, those aged between 25 and 34 are the most likely to be in debt, with this demographic also struggling manfully to get onto the housing ladder.
In this post, we’ll address precisely what we mean by the term ‘financial literacy’, and ask how you can increase this independently.
What Is Financial Literacy And How Can You Build This Skill?
In simple terms, financial literacy is defined as the ability to understand and apply an array of fiscal skills, including everyday money management, budgeting and calculating the repayment value of loans.
But what steps can you take to build your comprehension and learn how to apply specific skills in real life? Here are some ideas to set you on your way!
1. Read, Read And Read Some More
We live in the information age, where it’s possible to seek out huge swathes of data both on and offline.
From local newspapers and magazines to online trading seminars and international publication such as the stellar Wall Street Journal, these resources offer an insight into key financial skills while also sharing practical experiences and advice from individuals who have successfully accumulated wealth.
Reading will also help you to understand key concepts such as the ‘cashflow quadrant’, which explores the four primary ways of generating income (namely employment, self-employment, business and investing).
The idea is to scale your efforts from being an employed individual to someone who has capital to invest in an array of markets, creating streams of passive income that lead to the long-term accumulation of wealth.
2. Use Financial Management Tools
The notion of investing and trading is intrinsically linked to financial literacy, not least because this also requires you to build a broad base of knowledge before applying these in a practical setting.
This is why aspiring traders look to gain practical experience by using a demo account, which enables them to hone their theoretical skills in a simulated market environment of their choice.
On a similar note, you should also use financial management tools to help apply your newly acquired literacy skills, with a particular focus given to those that assist everyday budgeting.
Apps such as Mint are amongst the most popular, as they’re detail-led tools that help you to achieve a range of financial objectives over time.
3. Make The Most Of Your Network
On a final note, you’ll also need to rely on additional help and guidance when becoming financially literate. This can include expert guidance, with financial advisors and wealth managers capable of informing your decisions successfully.
You should also look to fully utilise your network when aiming to achieve specific financial goals, including both human and web-based assets.
For example, don’t be afraid to connect with people who have managed to achieve financial literacy and security, while there are various podcasts and e-books that enable you to enhance your personal finances.
By processing and utilising such insights, you can become financially literate in double-quick time and heed valuable lessons for the future.