Introduction

Financial Literacy is about making the right decisions about your personal finance. Schools only focus on professional training and do not teach properly about money and finance, that is the reason why many engineers, doctors, nurses, accountants many more professionals struggle in their financial lives. They know how to make money but they do not know how to manage their money and sometimes in their life, they can go broke and lose all the money they have earned.

Financial Literacy is one of the most important skills that everyone should possess and if not they must learn it in today’s world. Though we are slowly improving day by day as time goes along. 

This article will help you enhance your financial literacy and explain to you how it will give you an extra edge over others so that you can take your financial basic decisions judiciously without any wastage of money.

WHY IS FINANCIAL LITERACY IMPORTANT?

It means the ability to understand how money works in this world, it is the art of investing and managing money and the ability to make sound financial decisions, most of the people make the wrong financial decision and as a result, they lose all the money they saved for years. That’s why it is very important for every person no matter from which background they belong to they should have financial skills.

SITUATIONS THAT DEMAND THESE SKILLS

1. To meet out household expenses
2. Prepared for the Emergency expenses
3. To tackle the situation of Inflation
4. To diversify your investment to reduce risk
5. For retirement planning
6. Planning for your any leisure

These are few situations in which if you possess good financial knowledge then you can make a good decision and make your life as smooth as anything.

By analyzing statistics from reports, we can say that people of our country do not consider utilizing their hard-earned money, do not even be well aware of the safe investments they can make for their safe future, and many more financial decisions relating to their day to day lives. There is a lack of awareness about the investment options, so it’s our responsibility to be aware of these opportunities and make everyone make well known about them.

Most people think money is the real wealth that is not the case, money comes and go the real wealth is only, and only your financial education to handle that money judiciously. If you go broke sometimes in your life and lose all your money, You can gain even more than that with your financial education.

HOW TO IMPROVE YOUR FINANCIAL EDUCATION?

To better understand the money rules we should know about assets and liabilities

ASSETS – what produces money

LIABILITIES – what takes money away from you

For example – The property you earn and rent it to a Renter is an ASSET.

You rent your property and the renter pays you to rent every month assets put money in your pocket.

The property you live in and have a mortgage on is a liability because it takes money out of your pocket.

A financial Literate person tries to accumulate more assets and fewer liabilities. If you want to become rich then you have to have more asset class in your Portfolio.

So, at last, if you want to enhance these skills and want to make yourself aware of this then you can read reports, read articles, read books, read Government initiatives to improve the financial literacy of the people of our country. You can refer RBI website for clear statistics.

Make wise decisions and stay away from unnecessary debts.

WHAT IS FINANCIAL LITERACY?

If we take dictionary definition, it states that Possession of skills and knowledge helps an individual make the informed and effective decision with all their financial resources.