The Web makes it easy for you to learn as there are dozens of research journals, news articles, and personal blogs.
As a beginner, start with issues affecting personal finance, such as saving, budgeting, investing, credit, and debt. You don’t have to go directly into complex financial reports that make you give up before you even start reading about finance. Instead, start with simple articles with a conversational style and a range of anecdotes.
Later, you can camp in financial magazines and books with expert reviews and studies. Let’s look at where you’ll find the best resources for a beginner.
How and Where To Learn About Finances
If the 2021 survey by the Financial Industry Regulatory Authority (FINRA) is anything to go by, there is a need for financial literacy. Only 28% of people earning less than $25,000 have an emergency fund. Also, only 52% of the respondents knew how much they should save for retirement as they had taken time to calculate such needs.
Another issue arising from that survey was that more people with lower financial literacy borrow from pawn shops and payday lenders than those with higher financial literacy. On top of that, 23% of respondents with lower financial literacy incurred a late fee for credit card payments compared to 11% of respondents with higher financial literacy.
So, how do you become financially literate?
Read
There are so many books, magazines, and blogs. You can buy books that teach accounting basics, like credit and debit transactions. Further, you can search for books that teach investment basics to learn about stocks and shares.
But if you want to start with free information and later invest in books, there are dozens of financial blogs and websites, such as Investopedia and MarketWatch. Additionally, some podcasts discuss money and finance, and listening to them are excellent ways to spend your evenings.
Check Government Resources
Some are statewide, while others are national and global resources. For example, there are credible resources on scams, taxes, retirement savings, insurance, and credit. One thing that comes up in finance circles is credit score.
It’s your creditworthiness, and you’re more careful about borrowing from financial institutions when you know how it affects your credit score. For example, do you know what affects your FICO score? Your payment history and credit card utilization are the highest factors affecting it. Others are the length of your credit history, credit mix, and new credit inquiries.
Take Short Courses
It could be a free or paid course that certifies you as a professional. Some areas that could interest you as a beginner are budgeting and taxation.
Take Finance Quizzes
Testing your knowledge shows you weak areas you can later furnish with information from books and journals. One platform with a practical tool is the FINRA Foundation National Financial Capability Study. It asks about interest rates. Only 34% of the ones who took the test in 2021 got four out of five questions correct.
Use Financial Management Tools
Personal finance apps help you manage your money, whether it’s simple budgeting for your household or managing your investments. As you do these tasks, you also learn.
Why Gain Financial Literacy?
It Changes Your Spending Habits
You’ll know how to track your spending, prepare a budget, and ways to measure your spending against income. It gives you control over your spending because you know the consequences of overspending, such as credit card debts.
Learn How to Save
Looking at the types of bank accounts and their features shows you savings options suitable for your income. You learn the importance of an emergency fund, how to calculate your monthly savings minimum, plus savings rates. It also gives you the urge to set financial goals.
Make Better Decisions
Financial literacy teaches you to read between the lines.
For example, before asking for a loan, check the options available. Read about their terms and conditions first.
Also, see what you need to qualify for a loan, such as your credit history, cash flow statement, and income tax returns. That saves you from unnecessary debts arising when you apply for loans your income can’t pay in time.
You Learn about Fraud and How to Identify it.
One of the things you’ll come across when reading about credit cards is identity theft and how to use cards safely. Even topics about stocks and shares or investing discuss fraud in detail. For example, when using government resources, you learn about imposter scams, how to protect your identity, job scams, and how to recover after identity theft.
Final Thoughts
To make better financial decisions, learn about saving, investing, and budgeting. That’s what financial literacy means.
You’ll also be more careful about the lenders you borrow from because you’ll know how to calculate the annual percentage interest rate. Plus, you’ll know the consequences of defaulting on these loans.
