FinLit #1 What is Financial Literacy
If you want to learn about anything (how to drive a car, write a book or even raise a baby), you can probably find a good book or web page, or take a class to get a good basic overview of the topic in relatively short time. If you want to learn about money, however, the path to knowledge is more onerous and less clear, quick or easy. It’s ironic, considering that dealing with money is something we all need to do in some way or form. Becoming financially literate should certainly be one of the tasks on our “to do” list. Even if someone else takes care of the bills today, the harsh realities of life dictate that, at some point, you are likely to benefit from having a basic understanding of money and finance.
Every day Xoolo plans to give their readers a short lesson to fuel their financial education. In 5 mins or less, you’ll be able to walk away with actionable information that applies to your daily lives. Xoolo’s series of post to become financially literacy — FinLit, our new abbrev term — goals are to 1) debunk a financial concept or terminology 2) reveal the implications and effects of that concept to your daily life 3) how you can use this new knowledge.
Today’s lesson- Financial Literacy aka Financial Littness
What is financial literacy?
Financial literacy is not just wall street bankers or that guy on youtube ad telling you all how to get rich fast — We DISLIKE those guys!
Financial literacy is the mixture of financial, credit and debt management and the knowledge that is necessary to make financially responsible decisions — decisions that are integral to our everyday lives. Areas include paying for college, tax planning, retirement, time value of money, real estate, insurance, investment, compound interest and debt and saving techniques to name a few. Xoolo will eventually cover all of these topics and much more as we continue this journey. Anyone can become financially literate if the time is taken to learn to do so.
4 basics requirements of becoming FinLit
- Creating a budget
- Tracking spending
- paying off debt and finding profitable saving techniques
- Retirement planning
Implications and Effects of Financial Literacy
Becoming FinLit helps prevent poor financial decision making. Without financial literacy, which affects all ages and socioeconomic levels, you can fall victim to subprime loans, predatory lending high-interest rates, bad credit at worst foreclosure and bankruptcy. If you do not know what all of these terms mean, it’s okay because we’ll cover these topics as well. You can also come back and reread this post after you found clarity. Just know those terms are toxic for your financial freedom.
Becoming FinLit allows you to answer these three questions accurately:
- Is this purchase a requirement?
- Can I afford this purchase?
- Is this purchase an asset or a liability?
How can I apply this knowledge?
The complexity of finance has become a major disincentive causing people to give up before they start. Your first takeaway is that you will not know everything you need to know about finance in a day. It’s a constant but gradual learning process that you can master with time. To get better and become more educated you do not need to know formulas, but you do need to develop a discipline — maybe start with reading us daily. :) The second takeaway is financial literacy is not one thing but an accumulation of various concepts and ideas that create financial freedom. Financial freedom is at your discretion; we just want to help you define it and get there.
If you have any request of topics, you’ll want to know, email us firstname.lastname@example.org