How to Know If You Suffer From Financial Illiteracy

How to Know If You Suffer From Financial Illiteracy

What Is Financial Illiteracy?

Quality of life and health can be affected if you do not have good financial management. Each person is responsible for the situation in which they find themselves and the decisions they have made. Many times they are not done thinking about the future and you just want to get out of a bad situation at the moment.

Whatever the case, we are at the moment of acquiring responsibility for our current financial situation.

Unfortunately, most people fail when it comes to financial education. Maybe a lot is because they did not have a good home base because schools do not add financial topics when they do not study a career as an economist, finance or mechatronics.

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Fight against financial illiteracy

There are 3 basic financials that all economically active adults should know and master. If so, you can say that you have a good knowledge of personal finance and are on track to overcome financial illiteracy.

1. Learn to cope with emergency expenses

The emergency expenses can be many, these depend on each family or person and their habits. Some common ones can be medical expenses, accidents, repairs in the home, in the car and even legal help.How to Know If You Suffer From Financial Illiteracy

2. The ability to manage a debt

This is where many fail because they reach a very high level of indebtedness. At the time of acquiring a debt, you must know all the concepts included in the debt. Especially we talk about fees, fees, and interest. You must know exactly what happens when you stop paying and how much is the minimum you must pay not only to not have problems with the Clearing of Reports but to be paying the capital.

Do not buy financial products without knowing them in detail, especially credit cards.

3. Think about the future

Long-term savings are usually left as a last option. Usually, live in the here and now or even only the short and medium term savings are considered. The great importance of this saving is that it is money necessary for after retirement. Of course assuming you already know the importance of preparing for retirement. Then you must have clear the three different objectives of saving in the short, medium and long-term.

Ideally, once these concepts are covered, a fourth arises, which is the investment. People with great financial knowledge do not allow money to stay stagnant. They put the money to work through different tools, be it with financial institutions, passive income or even in the stock market.

Keep Reading: https://www.wetakecareofbusiness.net/importance-of-a-business-plan/

Currently, financial education is as important as learning to speak and write. It is basic for adult life and to be able to have healthy finances. There are no excuses for not starting to learn more and improve your finances; there is a lot of information available.

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