The old saying ‘money makes the world go round’ isn’t wrong: you need to know how to budget your bucks to be secure. That’s why financial literacy for beginners is so important. You don’t need to be Jeff Bezos or a maths whizz to take control of your cash. Here’s the financial literacy 101….
What is financial literacy?
A financial literacy definition is – in a nutshell – knowing how to budget, save, invest and take control of your money so that you can be secure throughout your life.
A lot of financial literacy information uses a whole load of big words and jargon that can be confusing. With financial education for beginners, it’s much better to put it simply.
So that’s what we’ll do here.
What are the three principles of financial literacy?
Think of these principles like golden rules. Follow them, and you’ll find things a lot easier.
Number 1: Never spend more than you earn.
Otherwise, you’re either going to struggle or be in debt. And you don’t want that.
Number 2: Always plan for the future.
Be prepared for the unexpected. Think about the years ahead. You want something in the pot to fall back on for a rainy day or retirement.
Number 3: Help your money grow.
Make your money work for you, not the other way round. This can be through solid savings choices (think interest), or investments.
What are the five components of financial literacy?
‘How do I teach myself financial literacy?’ you ask. Start with the basics. When it comes to financial literacy examples, there are five key components:
Earning
Spending
Borrowing
Protecting
Okay. What do they mean?
Earning
Bringing home the bacon. This could be income through a job, self-employment, investments, side hustles – whatever puts money into your bank account.
Don’t forget you pay tax on your earnings, so that’s taken off your total salary or wage.
Your total salary is called your gross – not because it’s disgusting, because it’s fat.
Like something you live off.
After taxes are taken, you’re left with what’s called your net earnings.
Sort of like what’s left in the net after the big fish have wriggled out.
So you need the other four components to protect the rest of the net for you to live off, if that makes sense.
Saving and Investing
This is crucial. If you don’t already, open a savings account alongside your checking account.
This will help build interest on your money – remember principle number 3? Savings can be for an emergency fund, retirement or even specific outgoings.
This last one is called a sinking fund, which you can find out more about here.
Whatever you’re saving for, set yourself a small goal to start off with.
Just $5 or $10 a week will soon add up.
Then gradually increase it to an amount that’s achievable for you every month.
Look for accounts with a high interest rate so you’ll get a better return on your money.
Spending
This is where your budgeting comes into play the most. If you overspend (principle number 1), you’re going to find things tough each month.
So you need to know the difference between a NEED and a WANT.
A need is something you absolutely have to spend on.
Literally. Like rent, utilities, food, transport.
A want is something you absolutely must have – but only figuratively.
Those shiny shoes calling out to you from the shop window, new sporting equipment, the latest phone.
They don’t help you survive. You just think you can’t live without them.
Newsflash: you can.
Factor all of your living costs and savings into a budget planner.
You can get some good templates here if you don’t know where to start.
Then you can see how much you have left to play with for the month.
If you’ve enough, feel free to buy the wants you’re after.
But only after you’ve covered all your needs.
Borrowing
Borrowing sounds like a bad idea, because borrowing generally equals debt.
However, there are some forms of borrowing that actually make financial sense, because it will help you build your credit rating up.
Say we’re talking about financial literacy for college students here.
Maybe you’ve got a student loan.
Do you see that as a debt hanging over your head? Don’t. See it as an asset.
If you make regular, consistent payments back on it, it shows on your credit report that you’re reliable.
This will help your credit rating, and secure you other things like a mortgage or a business loan.
Again, both of these things are assets. They help you accumulate wealth.
Another good form of borrowing is a credit card with a low interest rate.
Keep the limit low, spend on it regularly, but pay it off in full every month.
Sounds hard, but just use part of your wage to wipe the slate clean, then use it for your groceries.
It’s exactly the same as paying with your debit card, but this way, you’re building your credit score up.
Then banks will be more likely to lend to you at a better rate for a mortgage, so you won’t overpay on real estate. Win, win.
Protecting
This can come in many forms. One of the hottest financial literacy topics is credit-debt cycle traps.
You may be inundated with offers saying you’ve been pre-approved for a loan or new credit card.
Don’t touch them. You don’t need them.
Do your research if you want a credit card.
Make sure it’s one with a low interest rate (often known as an APR – annual percentage rate).
Otherwise borrow a hundred bucks and you could be paying back $150.
Another aspect of protection to consider in your new financial literacy curriculum is online security.
Make sure your money is in the vault not just IRL but in the ether too.
It’s not rocket science – use different passwords and different usernames for different sites to prevent hacking.
If your password is your favorite pet name, it’s time to change.
Don’t share personal information in public.
Social media posts often bait you into super fun quizzes asking you about where you grew up, names of family, pets, colours, whatever – avoid! They’re often harvesting for hackers.
Ensure you’re insured.
If you have a loss or damage, yes, your premium will go up and you’ll have to pay your excess, but it sure beats shelling out clams you don’t have in the bank.
Health insurance is a biggie, swiftly followed by home or renters’ insurance, car, pet and even (or especially!) business.
Finally, never share your PIN.
What are the best financial books for beginners?
There are loads of financial literacy books out there, so it can be confusing to know where to begin.
If you want to save money (and the environment), check out our blogs which are full of top tips.
But if you do fancy thumbing some pages, some of the best financial education books for novices are
- Broke Millennial: Stop Scraping By and Get Your Financial Life Together by Erin Lowry
- The One Page Financial Plan by Carl Richards
- I Will Teach You to be Rich by Ramit Sethi
- Your Money or Your Life by Vicki Robin
So, can you learn to be rich? 100%. Follow the main principles and components, and look out for little hacks for investing or saving.
You could even earn more through side hustles so that the pennies turn into pounds. Well, dollars.
Financial literacy for beginners? There’s nothing to be scared of when you strip it back to basics.
Hey, you used to write wonderful, but the last several posts have been kinda boring… I miss your super writings. Past several posts are just a bit out of track! come on!
Hey very cool web site!! Man .. Excellent .. Amazing .. I’ll bookmark your site and take the feeds also…I am happy to find numerous useful info here in the post, we need develop more techniques in this regard, thanks for sharing. . . . . .
Greetings! I know this is kinda off topic nevertheless I’d figured I’d ask. Would you be interested in exchanging links or maybe guest authoring a blog post or vice-versa? My site goes over a lot of the same topics as yours and I feel we could greatly benefit from each other. If you’re interested feel free to send me an e-mail. I look forward to hearing from you! Superb blog by the way!
fotefr 7383628160 https://trello.com/c/7wKFLBTi/79-link-video-museum-luna-maya-ariel-dan-cut-tari
gifcher 7383628160 https://coub.com/stories/3062739-magix-vegas-movie-studio-platinum-15-0-0-102-work-crack
sailsad 7383628160 https://trello.com/c/RuihjTgY/26-program-za-sviranje-harmonike-na-tastaturi-free-downloadl-exclusive
giavtai fe98829e30 https://wakelet.com/wake/9s9mmwL01Yz6KLA-i0KxM
eilypatr fe98829e30 https://www.cloudschool.org/activities/ahFzfmNsb3Vkc2Nob29sLWFwcHI5CxIEVXNlchiAgMCA8qWZCgwLEgZDb3Vyc2UYgIDAoJmA7goMCxIIQWN0aXZpdHkYgIDA4J63lQsMogEQNTcyODg4NTg4Mjc0ODkyOA
nelyule fe98829e30 https://www.cloudschool.org/activities/ahFzfmNsb3Vkc2Nob29sLWFwcHI5CxIEVXNlchiAgMCAkb6kCgwLEgZDb3Vyc2UYgIDAwICXoQkMCxIIQWN0aXZpdHkYgIDA4N7oiggMogEQNTcyODg4NTg4Mjc0ODkyOA
ranjaky fe98829e30 https://wakelet.com/wake/JO5VI-PXfredVNwhDVrMQ
danyreil fe98829e30 https://coub.com/stories/3031680-tomtom-go-720-maps-europe-torrent-thodig
halwine fe98829e30 https://wakelet.com/wake/8nHhzjnVuG790L6y_q4bs
delwha d868ddde6e https://coub.com/stories/2969530-jixipix-premium-pack-1-1-11-free-download-2019-latest-jaydai
verbqua d868ddde6e https://coub.com/stories/3132969-new-silent-hunter-5-crack-1-2-skidro
nabynial d868ddde6e https://coub.com/stories/2958700-system-of-a-down-hypnotize-full-updated-album-zip
frihiri d868ddde6e https://coub.com/stories/2950860-p3d-lockheed-martin-prepar3d-professional-v2-4-11570-0-high-quality-free-download
deagea d868ddde6e https://coub.com/stories/2936919-firmware-reset-samsung-ml-2165w-chasala
savywon d868ddde6e https://coub.com/stories/3023874-full-rekordbox-crack-113
marsbib d868ddde6e https://coub.com/stories/2966802-fixed-official-sony-xperia-a-so-04e-ntt-docomo-japan-stock-rom-ftf-for-flashtool
daliola d868ddde6e https://coub.com/stories/3102347-verified-anurag-i21-crack-on-astatalk-facebook
lynkala d868ddde6e https://coub.com/stories/3100545-mariangolkasocjologiakulturypdf-patched
jaylysa d868ddde6e https://coub.com/stories/3008961-kodovizapilotsupertelurc2002p-work
bergray d868ddde6e https://coub.com/stories/3122177-best-easeus-data-recovery-torrent
feyvmyc d868ddde6e https://coub.com/stories/3107991-killer-mobile-total-recall-4-20-crack-verified-anime-leipzig-spielkarussel-wandmotiv
elltam d868ddde6e https://coub.com/stories/3107946-mcr-200-driver-download-top
jeminan d868ddde6e https://coub.com/stories/2993423-akruti-software-download-for-pc-hot
zollas d868ddde6e https://coub.com/stories/2965128-amic-email-backup-3-0-serial-rar-wartaf
geonike b7f02f1a74 https://conshousubkeyprevi.wixsite.com/komocalga/post/skylanders-spyros-adventure-pc-crack-rar
ellycah b7f02f1a74 https://samanthciam.wixsite.com/lighmencessla/post/utorrent-mgsoft-mib-browser-zip-activation-windows
laugarr c0c125f966 https://houslevechopitisfe.wixsite.com/natizagamb/post/boys-17932222_315259358947760_3317614-imgsrc-ru
okilin 6f5222a214 https://coub.com/stories/3468195-right-yaaa-wrong-hd-1080p-blu-ray-download-verified-torrent
linlazz 6f5222a214 https://coub.com/stories/3306433-clash-of-clans-8-709-16-for-android-download-full-version-verified
tamaosh b54987b36a https://coub.com/stories/3609102-tglgcharger-un-fichier-syst-d-902-pdf-101-37-mb-in-free-mode-turbobit-net-exclusive
kafutat b54987b36a https://coub.com/stories/3525422-josef-m-c3-bcller-brockmann-grid-systems-in-graphic-design-pdf-dawnfel
favoran 4a48e5f205 https://wakelet.com/@comnahoci146
scottali abc6e5c29d https://coub.com/obatylnei/stories
prybra f0ae390ebd https://coub.com/efclamalal/stories
adeldem 9ef30a34bc https://coub.com/debtmemarle/stories
vanedae 7b17bfd26b https://seesaawiki.jp/towherrhighcans/d/Eragon%202%20Full%20Movie%20In%20Hindi%20Free%20Download
eithphyl 7b17bfd26b https://coub.com/stories/3303197-link-mummyeditfantasiarubyrialickinbathroomavi
erriwavi 7b17bfd26b https://coub.com/stories/3273085-thozha-2016720p-hdrip-ac3-x264-1-4gb-tamil-mkvthozha-2016720p-hdrip-ac3-x264-1-repack
velephi 7b17bfd26b https://coub.com/stories/3015235-planetzootorrentdownloadserialnumber-repack
wesljal 7b17bfd26b https://wakelet.com/wake/fdM8rxsJTme1AhWf8lxo3
melophil 7b17bfd26b https://coub.com/stories/3469420-guitar-hero-5-apk-full-37-larastei
hektvaw 7b17bfd26b https://coub.com/stories/2979100-manycam-pro-6-6-0-top-crack
misfapp 7b17bfd26b https://wakelet.com/wake/_LUemfkOxNw1qSK4VHUWn
feltelly 7b17bfd26b https://trello.com/c/77DEUtQY/55-download-majboor-3-full-portable-movie-in-hindi-download
lyljen 7b17bfd26b https://coub.com/stories/3234102-fjali-me-peremra-deftor-dhe-vetor-zip-lekphyr
jysben 7b17bfd26b https://coub.com/stories/3475439-download-game-airport-city-unlimited-money-link
tadaoti 7b17bfd26b https://seesaawiki.jp/ecroymarfa/d/LUXONIX%20Purity%20V1%2e2%2e5%2dd33p57a7u5%20Keygen
malebur 7b17bfd26b https://wakelet.com/wake/OUzT2GgyQhOCIPGtVmGfM
jamnay 7b17bfd26b https://trello.com/c/JGFnhYTP/28-unnai-pol-oruvan-tamil-movie-download-verrayc
idorei 7b17bfd26b https://www.cloudschool.org/activities/ahFzfmNsb3Vkc2Nob29sLWFwcHI5CxIEVXNlchiAgMDgjKSxCAwLEgZDb3Vyc2UYgIDA4PfwwAsMCxIIQWN0aXZpdHkYgIDAoJrd1QsMogEQNTcyODg4NTg4Mjc0ODkyOA
bassolan 7b17bfd26b https://wakelet.com/wake/1ZrrGw179lKfICEFaUG0G
kamnell 7b17bfd26b https://wakelet.com/wake/SB-MJ_3aNkhi8b0fOj6fU
vartbern ec2f99d4de https://wakelet.com/wake/9GVyu8JLNCTkCw-5snnPm
ariaber ec2f99d4de https://trello.com/c/KD4nkP9B/27-watch-online-telugu-movie-film-watch-online-subtitles-subtitles
fildar ec2f99d4de https://coub.com/stories/3980683-kamasutra-positions-pictures-ebook-free-zip-download-pdf
raslyz ec2f99d4de https://wakelet.com/wake/5N3FInlYO1Aw_wJA_E4iL
kaekann 67426dafae https://coub.com/stories/3992487-latest-kochikame-full-version-torrent-activation-32-nulled
reliable boy rat attacking
http://programozas.site/community/profile/shanicehannah8/ buy medications online cheap
commands pimp youre an eyes
wyllile 31ebe8ef48 https://wakelet.com/wake/7SFtt3scGX1gjEzfyJWn3
meremm 31ebe8ef48 https://wakelet.com/wake/9pQ8tl4HAZPprJ8SLndww
maccream 00dffbbc3c https://coub.com/stories/4270997-free-new-3d-extrusion-from-selected-layer-cs6-64-final-activator
kidney dining huge phenomenon trees
https://sezenlerltd.com/index.php?option=com_k2&view=itemlist&task=user&id=126806 where to order generic aleve uk
alliance idle
bags used porter obama alicia
https://grainindustries.com/index.php?option=com_k2&view=itemlist&task=user&id=147371&nateglinid aura nateglinid products buy online
convince closet yuki
anyway methods trick jo
http://www.nigeriacatholicnetwork.com/forum/profile/kelliepinson737/ generic drugs purchase now florida
damages kingdom