5 Ways You Can Become More Financially Stable
As the financial landscape becomes more complex, the need for financial literacy has significantly grown.
The ability for Americans to manage their finances has become increasingly difficult. Without financial literacy education, there seems to be no end in sight to the lack of good financial habits. Online purchasing and the move towards a cashless society are making it very easy to become overextended in debt.
Consumers that have financial literacy should be able to navigate through these strange times and successfully save for their retirement. The Board of Governors of the U.S. Federal Reserve System's Report on the Economic Well-Being of US Households in 2019 states that many Americans are not prepared for retirement. One-fourth of non-retirees surveyed said they had no retirement savings and less than four in ten people that have not retired yet believe that their retirement funds would last the length of their retirement. Studies show that Americans who maintain their retirement funds have little faith in their ability to make the correct financial decisions needed to achieve a successful retirement fund.
The solution is simple, yet time-consuming
With everything going on in the world, our financial lives are becoming much more difficult. With the rise of NFTs, cryptocurrency and fractional shares trading, it is getting harder to know how to navigate this financial matrix. Americans who are unsure of their financial future should begin to read books about finance and even register for online courses to better educate themselves on which financial moves to make. Finding a good, licensed finance manager or insurance agent is also a very smart move. Sometimes in life, you have to take a step back and reevaluate your situation so that you can make better decisions about your future.
5 ways you can become more financially literate
To be financially literate means having the knowledge and confidence to efficiently and effectively manage, save and invest money for you and your family. This can include everything from getting out of debt, budgeting, insurance, investments, real estate, college and retirement planning. Fortunately, it's never too late to increase your financial literacy — and there are several ways you can do this without spending hundreds of dollars on courses or seminars. By following these five tips, you'll be well on your way to being financially literate.
Developing a budget is a crucial step for financial literacy. It can help you find any holes in your spending and identify areas where you are overspending. Budgeting not only helps you see where your money is going, but it also keeps you on track toward saving money as well. Start by tracking all of your expenses, which will show if there are places where you can cut back and reduce costs.
The stock market has historically returned an average of 8% each year and is a great way for financially literate people to grow their money over time. If you're not familiar with investing, it might be worth your while to talk with a financial advisor who can walk you through how it works, help you select a portfolio that's right for your goals and match your level of risk tolerance.
3. Get educated
This term is used interchangeably with financially literate when it comes to achieving your long-term financial goals. It means knowing how you're saving and investing, what you're spending and why you are saving. After all, being financially literate is an important first step in attaining wealth. Start by educating yourself on topics like budgeting and planning for college or retirement.
4. Learn from mistakes
Do you have a history of mismanaging your finances? If so, you're not alone; many people experience financial problems at some point in their lives. It's never too late to take control of your money, but being financially literate means having a realistic understanding of where your money goes and knowing how to change things if they aren't working for you.
Financial literacy is a must for anyone who hopes to make sense of their money, and we all need a little help from time to time. If you're feeling confused about your financial situation, know that you're not alone. We've all felt like our money was lost in translation at some point — but don't worry: There are plenty of online resources out there that can help.
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