In this day and age, being smart in all aspects of life is the best way to go! This includes being able to make wise financial decisions and standing by them. This is where financial literacy comes in.
Being financially literate means having enough knowledge and skills to make the best and most suitable decisions depending on one’s financial circumstances. However, this also means being open to change and continuous growth on learning about the fundamentals as well as the constantly evolving landscape of finance.
Financially literate people share several unique characteristics that makes them stand out. Wanna know if you’re one of them? See how you measure up with these:
- You’re a budgeting pro
Prioritizing is key! You don’t just know the difference between needs and wants but you also have control over when (and how much) to spend for each of the two.
- You keep up your emergency fund AND still have enough for savings
Because you know how to balance your income with your expenses, maintaining your emergency fund can be easy. In fact, you even have enough to put away a significant amount for your personal savings!
- You take smart, calculated risks.
Another sign of financial literacy is having a good strategy particularly when it comes to investments. One good mindset is diversification wherein you invest on multiple platforms rather than putting all of your assets in one place. In this way, there is lesser risk of failed investments, or at the very least, you can still have other cards to play instead of losing everything in one deal.
- You have good debt-management skills
Having loans doesn’t automatically equate to financial illiteracy. This depends on how you manage your dues. A financially literate person can still take on debts, but also knows how to maintain a good credit score.
- You have long term goals
Instead of providing band-aid solutions to financial problems, you look ahead and project possibilities in order to guide present decisions. You know the value of patience and playing the long game in order to gain greater benefit years from now rather than simply getting by on a day-to-day basis.
So how well did you fare? Did you get 5 out of 5? If not, don’t fret because it’s not too late to learn! Even a simple research (through reliable sources) can go a long way. So what are you waiting for? Start now because your road to financial literacy begins today!