PENNY PINCHING OR EXTRAVAGANT!

JENNIFER G. DIZON

Financial literacy is the capacity to manage your money, including debt repayment, retirement planning, budgeting, and saving. It provides you with the knowledge you require to make informed decisions that raise your level of financial stability, lower stress, and enhance your quality of life Having sound financial knowledge enables you to manage your finances and seize new opportunities and challenges. Achieving financial well-being is crucial. You need to set realistic goals, monitor your spending habits, and have a firm understanding of your income and expenses in order to manage your money well. Expense management is making conscious decisions to reduce unnecessary spending and prioritize what is actually needed Being adept at cost and budgetary management can allow you to live within your means, save for future goals, and avoid debt. Saving and investing that money means putting it into goods or ventures that can yield returns. You put aside a portion of your salary for future usage. Knowing how your credit score affects interest rates, understanding the conditions of your obligations, and coming up with an effective payment plan are all parts of being financially literate. It also involves knowing the difference between bad debt (like credit card bills for that newest iPhone, a luxury) and good debt (like education loans, which can be considered as an investment in your future). Understanding Social Security and how deferring benefits might raise monthly payouts, as well as pension plans, 401(k)s, and other retirement savings alternatives, is a necessary part of financial literacy. Your intended retirement lifestyle, projected healthcare costs, and anticipated lifespan are all taken into account in a thorough retirement plan. A variety of products provide protection against different hazards, including property, vehicle, health, and life insurance. Make sure you have enough coverage for your particular situation. Putting money aside for emergencies and increasing your nest egg are two more risk control techniques. Become more knowledgeable about a range of financial products, including sophisticated derivatives and basic savings accounts. Basic ideas like inflation, taxation, and compound interest should also be understood by you. With this information, you may make wise financial decisions that fit your objectives and risk tolerance while navigating the financial landscape.

-oOoThe author is Teacher