{"id":11270,"date":"2022-12-04T08:00:00","date_gmt":"2022-12-04T08:00:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=11270"},"modified":"2023-04-01T20:04:06","modified_gmt":"2023-04-01T20:04:06","slug":"financial-literacy","status":"publish","type":"post","link":"https:\/\/businessyield.com\/finance-accounting\/financial-literacy\/","title":{"rendered":"Financial literacy : All you need to know (+free ebooks)","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

Financial literacy is needed in every field of study especially when starting some innovative business ideas<\/a>. <\/p>\n\n\n\n

Remember the general belief that the world revolves around money? So, neglecting the financial part of your business is to simply kill your business slowly without knowing. <\/p>\n\n\n\n

This article is a complete guide on everything you should know about financial literacy and how it can improve your business by 300%. <\/p>\n\n\n\n

It goes further to educate you on the components of Financial Literacy, Financial literacy for students, and importance with detailed examples. Financial literacy skills and financial literacy books (pdf) to make you a professional in weeks.<\/p>\n\n\n\n

Financial literacy Definition<\/strong><\/span><\/h2>\n\n\n\n

This is the ability to understand the terms and concepts in financing also using them to make impacts and informed decisions in financial situations.<\/p>\n\n\n\n

To be called a financial literate, one has to be able to apply financial skills in real-life situations. These skills are not limited to accounting, budgeting, investment, savings, data analysis. Someone who is not financially literate is a financial illiterate.<\/p>\n\n\n\n

Understanding Financial literacy<\/strong><\/span><\/h2>\n\n\n\n

Financial literacy is the understanding of basic financial components such as saving, budgeting, investing, debt management, and more. It is the ability to make informed decisions regarding everyday financial matters using available resources. <\/p>\n\n\n\n

You don\u2019t need to be a mathematics guru to be financially literate, once you understand financial concepts and you are able to apply them in a wide range of situations then you are good to go.<\/p>\n\n\n\n

For everybody who wants to make smarter financial decisions, being financially literate is one major step, if not the only one. <\/p>\n\n\n\n

The public is often concerned about the quality of their public education systems and the strength of their economies. Therefore, they miss the crucial fact that financial literacy is necessary for the upcoming generation to succeed professionally. <\/p>\n\n\n\n

Financial literacy statistics reveal negligence among public educators and communities in equipping their youth with the financial competencies that will help lay the foundation for a chain of positive financial choices. <\/p>\n\n\n\n

Read More: Best Businesses to start that needs low financial literacy<\/a><\/span><\/h5>\n\n\n\n

Working with programs run by both the public and private sectors, communities can foster an understanding of the benefits of financial literacy among their citizens. Financial literacy is very essential to everybody, from making budgets, to how you spend or how you invest, to how you lend out, down to how you retire still needs some skills in financial literacy. Being financially literate is a call everybody must answer in order to make smarter money choices.<\/p>\n\n\n\n

5 Basic components of financial literacy<\/strong><\/span><\/h2>\n\n\n\n

1. Budget<\/span><\/h3>\n\n\n\n

A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets are very essential in financial literacy. It can be made and used by individuals, businesses, including governments. Budgeting helps spend money smartly. In simple terms, it is balancing your expenses with income.<\/p>\n\n\n\n

2. Compound interest<\/span><\/h3>\n\n\n\n

This is one of the building blocks of financial literacy. Compound interest occurs when you invest your money ( any form of investment) and reinvest the interest gotten from that investment. The interest keeps compounding and that’s why its called a compound interest. It is also called interest on interest.<\/p>\n\n\n\n

3. Savings and retirement<\/span><\/h3>\n\n\n\n

One reason why people want to be financially literate is so that they can have enough savings and retire with a reasonable amount of money. Having a good retirement plan is one very essential benefits of being financial.<\/p>\n\n\n\n

4. Accounting<\/span><\/h3>\n\n\n\n

Accounting is recording or documenting all transactions in a business. There is no business without a proper account, which means to be financially literate you have to understand account or employ someone who does. Accurate accounts makes firm make more informed decision.<\/p>\n\n\n\n

5. Investment and stock market<\/span><\/h3>\n\n\n\n

Investment is putting out a fixed amount of money or buying an asset with the hope of it to generate more funds in the future. Stock market which is any place they buy and sell shares needs updated skills in finance, which means even if you are already a financial literate you will need to keep getting better.<\/p>\n\n\n\n

How to improve your financial literacy skills<\/strong><\/span><\/h2>\n\n\n\n

Improving financial literacy skill involves how to keep learning and updating your knowledge on some of the financial skills like budgeting, savings, investment, analysis and even to daily money decisions. Improving your skills in financial literacy can help you make smarter money decisions.<\/p>\n\n\n\n

Here are 8 ways improve your financial literacy skills<\/p>\n\n\n\n

#1. Read Financial literacy books<\/a>: <\/span><\/h3>\n\n\n\n

There are financial literacy books with so many subheadings depending on the financial skill you would want to know more about at that particular time. These books were written out of the experience by professionals in the field. You will find some recommendations later in this article.<\/p>\n\n\n\n

#2. Have a Budget: <\/span><\/h3>\n\n\n\n

The first step to creating a budget is tracking your money i.e. how much you earn and spend. Record your daily spending in any way possible and easy for you, soft or hardcopy. Separate fixed expenses from variable expenses, overtime it will help you set realistic goals. Doing all this will give you a proper picture of how your expenses will look like, it will enable you to know when and how to adjust some habits if necessary.<\/p>\n\n\n\n

#3. Listen to financial podcasts:<\/span><\/h3>\n\n\n\n

Podcasts are more convenient for some individuals because they get to multi-tax. Listening to financial news or personal financial experience is a great way of improving financial literacy. Another fun way to do this for movie lovers is to look out for these 9 business movies for entrepreneurs<\/a><\/p>\n\n\n\n

#4. Reverse budgeting (Pay yourself first): <\/span><\/h3>\n\n\n\n

This is a strategy mostly used by financial literates to reach their goals. The \u2018pay yourself first\u2019 strategy simply means paying yourself first when you get your income. For instance, your goal is to buy a house and a car, when you get your monthly income you first pay into your savings what you have planned to set aside for your goals \u2013say $600 for house and $400 and then you sort out your fixed monthly expenses. Then that whatever remains is yours.<\/p>\n\n\n\n

#5. Consult a financial professional:<\/span><\/h3>\n\n\n\n

At some point, you might need help in making financial decisions. It is advised you consult a professional in such a field. They will help you to analyze your present situation while helping you make better plans for a better financial future. They can also help you with the right place and time to make investments or simply contact us for help<\/a><\/strong> <\/p>\n\n\n\n

#6. Invest in your retirement:<\/span><\/h3>\n\n\n\n

This starts with having a retirement goal. Whatever goal you have will help you make better decisions on how to invest in your retirement. Here financial literacy makes so much sense because most of the times how well you retire says a lot about how financially literate you are. There is a retirement plan called the 401k plan. A 401k is a qualified retirement plan that allows eligible employees of a company to save and invest for their own retirement on a tax deferred basis. Most employers set it up for their employees but it is optional for them. It is also possible to have more than one IRA (Investment Retirement Account\u2019s) which means your options are limitless. Getting advice from a professional would also go a long way.<\/p>\n\n\n\n

Importance of Financial literacy<\/strong><\/span><\/h2>\n\n\n\n
\"importance<\/figure>\n\n\n\n

Financial literacy is one secrets of successful business. Imagine a business where the owner does not understand basic terms in financing, or a business were employees don\u2019t update their financial literacy skills? How then would they make informed decisions that would benefit the business?<\/p>\n\n\n\n

The Bureau of Labor Statistics predicted that by 2028 there will be 16 percent increase in demand for finance skills. Which means that as time goes on financial literacy becomes more important than it already is.<\/p>\n\n\n\n

Ways financial literacy can help you in business<\/strong><\/span><\/h2>\n\n\n\n
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  1. Helps you make more financially informed decisions: Financial literacy can help you weigh your options, analyze and predict outcomes confidently.<\/li>\n\n\n\n
  2. Creditors and debtors is one problem always faced in business being financially literate will help you handle them at ease.<\/li>\n\n\n\n
  3. It will help you have an advanced form of bookkeeping and accounting which means your business records will be efficient. Which means the business will have a better future.<\/li>\n\n\n\n
  4. understanding the impact of your actions is one great advantage of financial literacy. Financial literacy will help you and your team look at the big picture while doing anything, it will make everyone know the implications of their actions on the financial health of the organization.<\/li>\n<\/ol>\n\n\n\n
    Read Also: How to benefit from literacy business mentorship<\/a><\/span><\/h5>\n\n\n\n

    5. Being financially literate will help you become a better negotiator: There is a lot of negotiating to be done in business, negotiating salaries, projects, and investments. It will help you understand things that are detrimental to your business’s financial wellbeing. And also to know when you need the help of a professional in negotiations.<\/p>\n\n\n\n

    6. An average level of financial literacy can save you from being defrauded because you can easily identify red flags and you know exactly when things are not going as it should. It can help you ask the right questions, which means you will know exactly when to seek professional advice.<\/p>\n\n\n\n

    Advancing your career in financial literacy<\/strong><\/span><\/h2>\n\n\n\n

    There are no tied rules on how to advance your career in financial literacy, you have to use the methods that works for you as an individual.<\/p>\n\n\n\n