HOW IMPORTANT IT IS TO IMPROVE FINANCIAL LITERACY

MARITES M. DE LEON

Your ability to handle your finances, including debt repayment, retirement planning, and budgeting and saving, is referred to as financial literacy. It gives you the information you need to make wise choices that improve your quality of life, reduce stress, and increase financial security.

Being financially literate gives you the ability to manage your money and take advantage of new chances and challenges. It is essential to obtain financial well-being.

To effectively manage your finances, you must have a clear grasp of your income and expenses, establish reasonable goals, and keep an eye on your spending patterns. Managing expenses involves making deliberate choices to cut back on unneeded costs and give priority to those that are truly required.

You may save for future objectives, stay debt-free, and live within your means by being proficient in budgeting and cost control. Setting away a portion of your salary for future use is known as saving and investing that money entails investing it in things or endeavors that may provide returns. Being financially literate is about recognizing the impact of your credit score on interest rates, familiarizing yourself with the terms of debts, and creating a strategy to pay them off efficiently. It also entails differentiating between good debt (such as student loans, which can be seen as an investment in your future) and bad ones (such as credit card bills for that latest iPhone, a luxury).

Financial literacy involves understanding pension plans, 401(k)s, and other retirement savings options, as well as Social Security, and how delaying benefits can increase monthly payouts. A comprehensive retirement plan considers your expected lifespan, desired retirement lifestyle, and potential healthcare costs.

Different products, such as health, life, auto, and property insurance, offer protection against various risks. Ensure adequate coverage based on your specific circumstances. Other risk management strategies include creating an emergency fund and building your nest egg.

Strengthen your knowledge of various financial products, from simple savings accounts to complex derivatives. You should also be familiar with basic concepts, such as compound interest, inflation, and taxation. This knowledge ensures you can navigate the financial landscape, making informed decisions aligning with your goals and risk tolerance.

-oOoThe author is Teacher -III at San Juan High School - Mexico