How to gain Financial Literacy
Written by R. A. Stewart
Financial literacy is the ability to handle your money. It is basically the skill to make the most of your money and not fall into the traps of the illiterate. No one is born with financial literacy but some are born with an inability to understand financial matters. This may or may not be due to hereditary conditions.
For the majority of people, financial literacy can be learned and practiced. You can read all of the books on personal finance in the library but all of this information will do you no good unless you put it all into practice. And it is then and only then will the real you come out.
Being a savvy investor is not all about making the right investments but there is the mental side of it. You need to be able to stay strong when things are not going your way.
You need to keep a cool head when the markets are sluggish and your portfolio seems to be losing value. It is also the negative comments of others that you need to shut out. Everyone is keen to provide advice of some kind; it is up to you to discern whether it is good or bad advice.
It is therefore important to build up your financial literacy but you do not need to spend an arm and a leg on books on courses when it is all available for free.
Your town’s public library will have books on personal finance. Learn the methods used by these authors and apply them to your circumstances if they fit in with your financial goals.
You may even pick up a few financial books at a charity shop in your town. I have. It is unbelievable to think that when so many people complain about inflation, cost of living, and so forth that few people find it worthwhile to purchase these books for a dollar or two.
The internet has a lot of free financial advice. Just do a google search of any financial question you have and see what comes up. There are videos of a financial matter on youtube if you prefer to watch videos.
All of this will assist you in making the right choices but, keep in mind that mistakes will be made and the main contributors to financial mistakes are greed, fear, and a lack of knowledge, These can easily be overcome by financial wisdom. Having the discernment to know bad advice from good advice is a good quality to have.
There really is no excuse for financial ignorance because it is more widely available than ever before.
Obtaining head knowledge is one thing but putting it all into practice is another and that is where your real knowledge develops. What you read and hear is information but it only becomes real knowledge once you use that information.
There is no greater teacher than real life experience.
Your mistakes will be your most expensive lessons but you do not need to make the same mistakes as others have made. Just keep your eyes and ears open to whatever is in the news and you will learn of occasions where investors have lost considerable sums of money. Try to figure out the lessons in these situations in order to avoid making the same mistakes.
Studying history can be useful if you can learn from the mistakes of previous generations in years gone by. The 1987 stock market crash (Black Monday) has plenty of sad stories. Many people never recovered from that while others were more cautious with their money. Same as with the 2007/08 Global Financial Crisis (GFC). A number of retired folk lost all their life savings when several finance companies fell over. Again you will learn some valuable lessons from some of the mistakes these investors made.
Wisdom comes from life experiences; if you are young you will hear stories from the older generation. Keep your mouth closed and listen because you will learn valuable lessons.
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