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Money management is complex for many people, regardless of their economic status. Financial literacy is, simply put, the ability to comprehend concepts and principles concerning money. This could include learning how to navigate loans, debt, or interest levels or what type of savings and growth opportunities are the most worthwhile.
Ideally, people start working on their financial literacy early in life to get the most out of financial planning strategies. However, this is not always possible or accessible, especially when it can be challenging to know where to start.
Whether you’re facing difficult economic times or want to learn how to improve your finances, there are several ways to go about it. In the interest of saving money, we’ve put together free resources that you can use to increase your comprehension.
1. Sign up for a Free Course or Class Online
Many financial experts charge for their services, but they offer free courses or materials to help people study independently. You can find classes on-demand online, but there are other places to gain this knowledge.
Certain financial advisors hold in-person meetings to allow people to learn and ask questions. They may try to sell you their services, but there is no obligation. You can also find live classes online where you can interact in real-time.
2. Join a Financially Aware Community Online
Social media offers plenty of sound financial advice and allows you to connect with others who are interested in improving their finances. For example, Facebook has many free groups you can join.
Within online groups, you can not only meet people with similar goals and share knowledge but joining a group can also help you and others hold yourself and others accountable. But always remember to keep your data private and cross-reference any suggestions you receive. Many people pose as ‘gurus’ who have no solid qualifications.
3. Read Financial Books & Online Materials
You can rent many financial books for free at the library or online. But if you struggle to finish a book, like I do, or don’t have the time, consider audiobooks or shorter materials, such as magazines or financial blogs, online.
Research different topics and figure out if there are one or more people whose financial advice makes sense to you or is easy to understand. Some people offer financial advice in large chunks, while others break it down into bite-sized pieces that are easier to digest.
4. Learn How to Manage Your Debt
It can be difficult to manage debt once you owe a large amount of money or have debt in multiple places with interest stacking against you. Learning to avoid or reduce debt is one of the most beneficial steps, especially if you are not already in debt.
While you may benefit from meeting with a financial advisor, there are steps you can take to research how to reduce debt on your own. For example, if you have a credit card or loan with a high interest rate, you may want to pay that debt off before other debts with a lower interest rate.
5. Use Social Media to Learn
The way people use the internet is constantly changing, and there is more information readily available at the click of a mouse (or phone) than ever. This can feel overwhelming, so curating your online social media feeds can be helpful.
Instead of using social media to look at cat videos or food photos, consider following finance-oriented accounts. When you feel the urge to scroll social media, you can get some education instead of feeling like you’ve wasted your time.
6. Learn How to Create a Budget
Budgeting is a skill that is rarely taught in school or to young people, and most struggle to learn how to budget on their own for the first time. Sticking to your goals can be challenging, even if you know how to budget.
Whether you have an excellent income-to-debt ratio or live paycheck to paycheck, creating a budget can’t hurt. If nothing else, it will bring awareness to how you spend your money and how much you have.
7. Learn How Credit Scores Work
Credit scores and reports can be incredibly confusing, especially if you’re a young person initially building your credit. By understanding the basics of what affects your credit score, you can take careful steps to avoid dings while increasing your score.
Good credit is essential if you plan on making a big purchase, such as a car or home, and your credit score affects much more than you may realize. You can get better interest rates or qualify for more opportunities with a higher credit score.
8. Research Your Investment Options
Investing a portion of your money is the best way to save for the future. However, navigating the options available can seem overwhelming, and even knowing where to start can hurt your head.
Even having a small savings account is a great place to start because it will be there for you in the case of an emergency and can earn interest, even if it’s a small amount. Depending on where you bank, you may be able to meet with a financial advisor or banker for free. They will likely try to encourage you to use their services, but it is not required.
9. Change the Way You Spend Your Time
How you spend your “free time” can help you improve your financial situation, even if you’re not actively working or earning money. For example, you could replace an hour of Netflix with an hour of a financial podcast or documentary.
This isn’t to say you shouldn’t spend time doing things you enjoy. However, if you mindlessly scroll on your phone or re-watch the same show you’ve seen a few times, it may be time to re-evaluate.
10. Set up Automatic Saving Contributions
Depending on where you bank, you may be able to set up an automatic saving contribution. This means that you can set up a withdrawal from your checking account or income to transfer directly into your savings account.
Putting away any amount, even as little as $20 a week or per month, can make a big difference over time. This is a great way to start if you still need to prepare or be educated on your other investment options. There is typically no associated fee for setting up an automatic contribution or transfer between your accounts.
11. Research Insurance Rates
Do you understand the various factors in calculating your home, renters, or care insurance? Did you select the company that offers the most competitive rate and have the opportunity to make individual selections, or did an agent rush you through the process?
You may be overpaying if you aren’t aware of the options available and haven’t educated yourself about how insurance works and what exactly you’re paying for.
12. Research & Compare Prices Thoroughly
Do you spend time researching your purchases beforehand to ensure you’re not being price-gouged? A lot of money is wasted simply by not being aware that there’s a cheaper option available.
We’re not saying to pull up a price comparison every time you need to buy a pack of gum or a bottle of water, but doing a little research before making larger purchases can make a big difference. You can do this manually by searching the internet for an item you intend to buy and seeing where it’s cheapest. Tools are also available online, such as browser extensions like Honey or Capital One Shopping.
13. Take Steps to Understand Your 401(K)
The terminology surrounding investment accounts can be very confusing. You may or may not have had the chance to read the documentation or select your investments.
If you work at a company contributing to a 401(k) or similar investment account, there may be someone you can speak to for free to learn how your account works. They can review your options with you and ensure you know how to make changes and navigate your account.
14. Learn the Basics of Money
Understanding how money works within the global financial system is critical to understanding the more complex aspects of investing. You can gain this knowledge by watching documentaries, YouTube videos, reading, or listening to NPR and other radio shows.
Be sure to research where you get your information to ensure it is accurate and unbiased. There will always be fads and confusing information out there, but a wealth of free, accurate information can also be found online.
15. Learn How to Borrow Money
It might seem silly, but one way to reduce your debt risk is to learn how to borrow money. Not every loan is made equal, especially regarding interest and the amount you will be required to pay back.
Understanding how loans work can help improve your financial health and help you avoid high-interest loans, credit cards, or other forms of debt.
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