Why is financial literacy so important in 2024

Having a basic grasp of your finances has never been more important, but there are some that find the idea of financial literacy boring for several reasons.

Maybe due to a fear of numbers, having someone else in the household managing the finances or living for now and not having any thought for the future.

As someone that writes about the basics of money, I read a few blogs, news articles and opinions on the subject.

Unfortunately, it can be difficult to weed out those that are useful and can have a positive impact on your finances from those that are not.

The trouble is, with so many treading water, looking for opportunities to improve their financial outlook we can often turn to those things that make huge promises that don’t deliver or prey on our desperation.

It’s for that reason I’m going to outline why I think that financial literacy is so important in 2022.

What is financial literacy?

When we write or talk about money, we often focus on those things that encompass “personal finance”, so saving, budgeting, investing, making more money and ensuring that we are making our money go further when it comes to shopping.

Being financially literate means that you have a good understanding of the fundamentals of money and are able to put into practice what you know so that you’re able to deal with a financial decision, be it good or bad in order to limit the risk or realise some sort of financial benefit.

If you took an unforeseen drop in your household income would you be able to manage, because you have contingencies in place or would you struggle to meet all of your financial commitments?

If you had a sudden windfall would you put it into assets that would quickly lose value or would you look for opportunities to make that money work for you?

Being financially literate would mean that you would have an idea of what to do should either of these events present themselves.

How do you become financially literate?

The fact that you’ve taken the time to come to read this post, shows that you’re serious about your finances and getting to grips with your finances or that the very least curious about what I have to say on the matter.

Of course, I’m only one source of information and to that end, like some of my blog posts where I would have you use several comparison websites in order to find the best deal, I would suggest that you visit more than one source of information for whatever it is you want to improve around your finances.

Remember what you read, listen to and see is only the opinion or our interpretation of what we believe to be true, so getting a fully rounded view of opinions and then making your own decisions based on these will not only get you thinking analytically about your money but also have you test the validity of what you’ve been told.

So why is financial literacy so important?

It can save you from scammers

Unfortunately, when people face struggles, scammers see this as an opportunity to make money out of them, preying on our desperation

While no one is infallible to these scammers, with financial knowledge you will be in a better place to see through them.

Allows you to see opportunities when they present themselves to you

When you aren’t financially literate you might slip into a scarcity mindset rather than one of abundance.

This can result in potentially lucrative opportunities passing you by.

It will improve your financial situation

Improving what you know about money opens up a world of possibilities into making more and saving more while at the same time giving you the confidence to better understand what it is that you really want from it, be at the freedom it gives, the memories that it creates or simply the things that you can buy.

It gives you the knowledge to pass on to others

Having two children and considering myself to be somewhat financially literate, gives me knowledge that I can pass on to them when the time comes that they need to know the value of money and hopefully this will see them good well into adulthood.

When we talk about money more we can pass on knowledge to friends and family and seeing how they benefit from it can also give you a sense of satisfaction.

How to become more financially literate 

Do your own research

This is adding to what I’ve already said, but don’t ever rely on one source for your information.

Read more, watch more and get a thorough understanding of what it is that you believe you really don’t understand.

It’s only when you take the initiative that you find out information for yourself that things start to click.

Use tools that are freely available

The first tool that I came across when looking to read more about finance was Feedly.

Feedly is a great news aggregator that I use to add all of those websites that keep me on top of what is happening with everything to do with finance and business.

Read more

It’s easy to turn on the TV get your remote and sink into your comfy sofa but unless what you’re watching is about your finances you aren’t going to learn much.

This isn’t to say that your every waking hour should be consumed with financial literacy, life is for living after all.

Be openminded

You’re going to come across a lot of things that you don’t necessarily agree with and saying so is fine, but remember just because you don’t agree with something, doesn’t mean that it won’t help someone else out.

It’s okay to disagree with something and leaving a comment is a great way of opening a debate.

Be consistent

Whether it’s saving, investing or reading being consistent is key.

You do need to block some time out of your week to focus on these things, 30 mins might not sound a lot, but if you do it every day, you will be surprised how much you can learn.

Don’t be afraid of the numbers

While being financially literate is in some part about the numbers, these numbers aren’t terrifying, and shouldn’t be something that you dwell upon for too long.

Instead, focus on the outcome, this will motivate you to become confident with the numbers that matter.

Give yourself time 

Financial literacy isn’t like ordering a McDonald’s meal, where you place the order and it’s bagged up almost instantly.

It takes time, so allow yourself that time.

It can be easy to beat yourself up when you perceive things aren’t going your way or you don’t quite understand a concept, but they are just perceptions, which might not be based on fact, and if you feel this way step away and come back to it another day.

Conclusion 

So there are the reasons why I think that financial literacy is so important.

You might agree or you might not agree you may even think of her good reasons as to why financial literacy is so important which I haven’t featured in this post and if that’s the case feel free to leave them in the comments.

Remember financial literacy isn’t about being the next Warren Buffett, though having just a small fraction of what he has would be nice, it’s about gathering your own thoughts and understanding of all things personal finance.

Becoming financially literate is also about you you think, so think positively about your finances and be open to opportunities.

And if you are not in a place financially where you want to be, remember that it isn’t going to last forever and there is support out there if it’s needed.