Fact No.1: it’s not possible to make smart financial decisions without financial literacy. Fact No.2: 74% of Americans have financial regrets. What does this tell us? That most people would benefit greatly from being more financially literate.
Whether you’re just starting to think about savings, already juggling personal loans, or looking into investments, knowing how money works can prevent mistakes that cost you later. But where do you start?
The good news is that today’s technology provides a ton of resources to help you improve your financial knowledge – without a ton of effort on your side. From budgeting apps to platforms that teach about loans and investments, you’ve got plenty of options to boost your financial literacy.
Why Financial Literacy Matters
It’s easy to underestimate how important financial literacy is until you’re faced with big decisions – buying a house, starting a business, or planning for retirement. Without a solid understanding of basic concepts, these choices can feel overwhelming. And mistakes can be costly, both short- and long-term.
- Budgeting: Most people think they know how to manage their money, but a large percentage still live paycheck to paycheck.
It’s important to understand that budgeting isn’t about simply avoiding spending – more than anything, it’s about understanding how to allocate funds, control impulse purchases, and make sure you’re saving enough for emergencies and future goals. Learning how to budget properly can give you control over your financial future.
- Loans: Loans, especially more complex ones like Small Business Administration (SBA) loans, are another area where many people fall short.
Securing SBA loan approval requires not just understanding interest rates and loan terms but also knowing how to present a strong financial picture. And without a plan for paying them back, loans can quickly spiral out of control.
- Saving and Investing: Saving and investing, too, require more than a basic understanding. For instance, you might know you should be saving, but what’s the best way to do that?
Should you put your money in a high-yield savings account, invest in the stock market, or consider bonds? And when do investments become a more logical option than simply saving? If you want to build wealth in the future, understanding the principles behind these choices is crucial.
Tools for Improving Financial Literacy
Budgeting Apps
One of the simplest yet most effective tools to improve your financial literacy is a budgeting app. Apps like You Need a Budget (YNAB) and Mint are popular because they make it easy to track your spending and saving, so they help you understand where your money is going each month.
YNAB, for instance, is more than just a tracking tool – it encourages you to assign every dollar a job, which helps you stay proactive with your finances.
Over time, you start to recognize patterns and understand how to adjust your habits. Mint, on the other hand, automatically categorizes your expenses and offers insights based on your spending patterns. These kinds of apps are useful because they teach you financial discipline by showing how small decisions affect your broader financial picture.
Educational Platforms
If you’re looking to deepen your understanding of loans, savings, and investments, a range of educational platforms can help. Khan Academy offers free, easy-to-understand lessons on topics like debt, savings, and investing, making it a great starting point.
If you want to go a bit deeper, platforms like Coursera and Udemy offer finance courses taught by industry experts. These give you the opportunity to learn at your own pace and focus on the areas that are most relevant to you.
You can always check out our blogs at Fintechzoom Pro for more information on various topics, from investment to savings to banking all the way to crypto. NerdWallet or The Balance are also good sources with lots of in-depth articles that cover everything from how to choose the right credit card to understanding mortgage rates.
Investment Tools
When it comes to investments, the options can be overwhelming: stocks, bonds, mutual funds, ETFs, and more; how do you choose? If you’re new to investing or looking to improve your strategy, platforms like Betterment and Wealthfront offer automated investing tools that make it easy to get started.
What’s helpful about these robo-advisors is that they often include educational resources as part of their service, so you can learn more about where your money is going and why certain strategies are suggested for you.
For those wanting a more hands-on approach, Robinhood or Fidelity offer platforms where you can buy and sell stocks directly. Robinhood, for example, appeals to beginners because of its simple interface, while Fidelity offers more comprehensive resources for seasoned investors.
Conclusion
Improving your financial literacy is one of the most empowering steps you can take for your future. The more you understand how money works, the better decisions you’ll make regarding your everyday expenses, handling loans, or growing your savings and investments.
While there are plenty of tools to help you improve your knowledge, remember that financial literacy isn’t something you can pick up overnight: it takes time and a real commitment to learning. It’s an investment, but one that definitely pays off.