If it’s been a few months since you moved out of your parents’ house and started living on your own, you must’ve realized that life isn’t a piece of cake. The things that seemed like a blessing some time ago, such as having your personal and financial freedom, now feel like a condemnation.
What if I tell you that learning about financial literacy may help you improve your personal and professional life?
Financial literacy is just a fancy word for learning how to manage your everyday finances. It includes everything from setting a budget, saving part of your earnings, and investing your savings to generate revenue.
Best Financial Literacy Tips for Beginners
While all of that may seem easy at the beginning, without financial literacy, you’ll feel broke and devastated all the time. I learned it hard and wouldn’t want the same for anyone. So, here’s my list of financial literacy tips for beginners.
1 – Make a Proper Budget
We know what you’re thinking – you know what you need and how much it costs, why do you have to write it down? However, if you want to organize your expenses so you can be financially productive in the near future, you’ll need a properly written document to keep an eye on your expenses.
Your budget doesn’t necessarily have to be maintained on high-end software or a paid app. Start by making a simple excel sheet noting down everything you spend. This will not only give you a clear picture of your expenses but will help you see any loopholes and problems in your everyday expenditure.
However, remember never to obsess over your budget. There will be times when you won’t be able to stick to the plan. Let it go and relax, after all, it’s all about you in the end.
2 – Note Your Complete Financial Details
If you’re a student, you’re probably neck-deep in student loans. It doesn’t matter how bad it is, you need to write down the exact amount of debt piling up on you. Besides that, make a note of your net worth, taking into account every small thing you own and all of your savings.
This might seem insignificant, but as you move forward to effective saving and investment options, a clear view of where you stand will be helpful.
3 – Lead a Realistic Lifestyle
The third of the financial literacy tips for beginners is to lead a realistic lifestyle.
Yes, we can’t possibly overstate the importance of this. Keep your lifestyle strictly according to your basic earnings. That doesn’t mean you shouldn’t have fun now and then, but don’t overdo it. Investing in luxuries such as eating out daily or partying every weekend while slowly eating up your savings isn’t a financially literate decision at all.
As a simple rule of thumb, you must remember to live below your means. In short, whatever you treat yourself to – make sure you do it well inside your salary limit.
When we’re young, peer pressure and outward appearances matter to us a lot. Rather than showing yourself off as a person with branded clothing and luxury cars, make a smart, self-composed image for yourself. That will benefit you in the long run.
4 – Create Separate Accounts for Checking and Savings
This is a crucial aspect if you really want to keep your savings safe. Otherwise, you’ll end up using up your savings as well without any calculation.
Also, it makes calculations easier for you. When you get your salary, transfer your monthly allotted savings at once into a separate account, and enjoy spending the rest without any concern. Even if the amount is limited, this way, you’ll find a way to manage things. Just make sure not to touch the savings account.
Most importantly, look into bank accounts that give good interest rates on your savings, to generate steady revenue from your income.
5 – Keep Yourself First
You’ll find this concept in lots of financial literacy books and publications. It’s like saving up for your future like you usually do but changing your perspective in this case. Most people do it as soon as they get their salary, they start by paying the bills, the rent, and whatnot.
The key to being financially at peace is to keep yourself first. Before taking out money for all that, pay yourself. Keep a particular amount aside as savings for further investments to benefit yourself. After all, it’s you you’re working for, right? You can use a tool like Personal Capital to manage your money in less than 20 minutes per month.
6 – Take Out Time To Learn and Understand
If you don’t keep track of the financial world, you’re highly unlikely to move forward from where you are. Increase your basic knowledge about concepts such as investments, interest rates, dollar-cost averaging, etc. Money podcasts and Reddit personal finance groups are some great ways to learn more and interact with a community of like-minded individuals.
Besides that, look for opportunities to grow your income. Maybe learn a new skill, improve your existing ones, or begin some side hustles. Investing in yourself will prove more beneficial than you think.
7 – Ditch Procrastination
Let us guess since you’ve read the first tip, you’re scrolling down on each one thinking, yes, I’ll start on that tomorrow. If we are right, the first thing you need to do is change your attitude. No matter how harsh you think it is, you’ll find no one to assist you with your personal finances. So how you manage them depends totally on you.
Why does that matter? Even though it seems insignificant right now, every little decision you make today will matter in the future. Start organizing everything today and make your hard work pay off.
8 – Have Fun, but After You’re Done With Calculations
Perhaps the most difficult aspect of managing your finances nowadays is that everything is so accessible. You’ve just opened your browser up, and you’re pounded with all sorts of advertisements out to get your money. Beginners tend to fall for that easily, according to my personal experience.
Whenever I used to see something I liked, if I had the money, I’d buy it. Now, as a person who has faced the consequences for that, I’d say give it some time. As a day or two passes, you’ll realize you don’t actually need that stuff at all.
Coming to that, you need to understand that ‘stuff’ isn’t what you need. Usually, we spend so much on things that will soon run out, or we’ll get bored. Instead of such trivial things, invest in learning experiences and opportunities that promote your personal and financial growth.
9 – Set Defined Money Goals for Yourself
Where do you want to be financially until the end of this year? That’s the most dreaded question for every beginner, but it does give some self-realization. Do you really know where you stand? Or, if what you’re doing right now is going to be beneficial for you?
You won’t know any of that unless you make a definite goal for yourself. It doesn’t matter whether you achieve it or not. Again, never obsess over your plans. If you have goals, at least you’ll be able to compare achievements to your expectations, and who knows, maybe you end up exceeding them?
Also, once you start achieving your financial goals, don’t reward yourself by spending a hefty amount. Instead, upgrade your goals for the coming year to keep testing your limits.
Wrapping this up, just remember that financial literacy is not something you can learn overnight. Yes, you can do your research and work on it yourself, but in the end, you’ll be learning from your own mistakes and experiences.
So, don’t worry if something goes wrong, and stay well-informed and organized. Everything else will fall into place if you have a streamlined vision for your future self. Use these 9 top financial literacy tips for beginners and you’ll be well on your way.
Robin Edwards, often hailed as "The Penny Hunter" by her close circle, is not just a financial writer; she's a financial educator committed to helping people understand the value of every penny. With a background in finance and a knack for simplifying complex financial concepts, Robin has become a go-to resource for those looking to take control of their financial destiny. With her zero-based budgeting method, she's changing the way we think about money, one dollar at a time.