Following on from my previous post about being ready for retirement, I thought I’d circle back around and talk about financial literacy. At the end of 2020/beginning of 2021 when I was still self-employed I spoke a lot both on social media and on my blog about ways to save money, and then spent most of last year paying off my credit card. Despite that, even my knowledge is lacking when it comes to being money savvy.
Currently 67% of UK citizens are deemed financially literate, a serious and frequently ignored problem that keeps the country behind other countries in the Organization for Economic Co-operation and Development (OECD).
It’s my absolute conviction that these sort of life skills should be taught in school because I’ll be honest – knowing about savings and investments would have been a million times more important than any of my A-Levels. Greater understanding allows us to make knowledgeable financial decisions by providing us with the confidence to understand concepts like saving, investing and debt management. Cultivating this over time can create a far greater sense of fiscal wellbeing and security so here are some steps that may help.
Establish Your Financial Goals and Build Your Knowledge Base
Let’s start with the basics, the core concepts of financial literacy such as saving, budgeting, and investing. These are all important to understand as they will provide us with the proper guidance to identify the necessary financial boundaries and clear objectives we have to set in your lives.
By doing so, we can create clear guidelines to help us plan for the future. This could include a clear goal in terms of how much you want to save (we for a lifetime travel trip, wedding, mortgage etc) or if you are trying to save money for the future and are looking to build your retirement plan.
On a similar note, you should also identify the gaps that exist in your financial knowledge so that you can target them more effectively and build your literacy understanding.
This also prevents you from becoming overwhelmed and affords you the best possible chance to become financially literate and secure. We can often be scared of things we don’t understand, especially when it comes to still taboo subjects like money, but learning is always best.
Do You Have a Preferred Learning Method?
If you’re going to set financial literacy as a self-learning objective, it’s also important to determine a reliable source of information. There are a huge amount of resources out there but how to know who to trust and how best to digest the information?
Start with thinking about your preferred learning method, as this will help make the most of your learning and ensure higher levels of knowledge retention over time.
There are some amazing accounts on social media who are really setting out to explain complex information very clearly and turn the tables of the taboo side of talking about money. I tend to take a look at the comments section to get indication of how valid the information is. Ultimately, as with most things, if you can find someone who can explain in layman’s terms then it’s job done. An expert in a subject doesn’t necessarily make a good teacher.
Consider the Merits of Professional Help
If you want to learn from a trusted source and take on as much knowledge as possible in a short period of time, it may be worth considering professional help.
Normally if you’ve sought financial guidance previously, such as a broker for your mortgage, they will be able to provide support in other areas of finance or at least recommend the correct professionals as needed. It’s also worth asking friends and family for recommendations because word-of-mouth is probably the safest way to find a trusted advisor.
Paying for a professional service provider will also help to focus your mind (that tends to happen when you’re paying for a service) and they will also be available for future support.
It can be incredibly daunting to take on the world of finance and I am often guilty of sticking in my head in the sand but the most empowered I’ve felt recently is starting to tackle my own financial well-being, from paying off my credit card, adding more each month into my pension pot, and increasing our savings pot for our future extension. It’s truly liberating.
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