Why Financial Literacy is the Key to Success
Making money is a mechanical process. It’s really not all that different from driving a tractor. As long as you know where all the controls are and what they do, you should have no problem avoiding putting a tractor-shaped hole in your barn.
The same goes for money. Financial literacy is no different than knowing which handle is the clutch and which is the brake on that tractor. It’s the key to getting control of your finances and keeping control.
Terminology
Like most fields, finance has its own dictionary of terms. For people who want to learn how to take advantage of their knowledge of finance, knowing how to read and express that knowledge is a fundamental key to success.
One of the best ways to learn this new language is to study the authoritative materials for the Series Seven exam. The study materials and example tests are both practically guaranteed to not only use the correct terminology, but to do so in a way that reinforces its value.
Financial Fields
Like law, finance has become complex enough that specializing in one area of knowledge can have a significant impact not only on your earning potential, but the kinds of things you’ll need to know in order to succeed. What kind of finance you study will also determine the amount of work required to “round out” your financial literacy.
A financial advisor who has individuals as clients is less likely to be concerned with things like IPOs and large asset depreciation than someone who is advising a large corporation. Whichever field is chosen, the advice remains the same: learn everything possible about that field to maximize the value of your specialization.
Day to Day
The number one money problem in America is that most Americans don’t know they have a problem. Lack of financial knowledge makes it nearly impossible for individuals to get a handle on their money situation and keep control of their expenditures, incomes and net worth.
Financial literacy gives everyone who obtains it a lens through which they can get a far better sense of where they stand financially. This knowledge translates into better planning, better options and better results. For these reasons alone, understanding finance is worth the additional effort required, even if some of that knowledge doesn’t happen to apply to the immediate circumstances.
Finance is one of those things most people think they don’t need until they really need it. Studying the subject well is a good first step towards solving one of the biggest common problems faced by every individual.
David Milberg is a financial adviser and an investment banker from NY.
