From where you live to what you eat, money affects all aspects of day-to-day life. Unfortunately, most people still struggle with not having enough of it. Financial insecurity can lead to adverse health effects, including poor mental health like depression or anxiety; as well as physical symptoms such as migraines, heart disease, insomnia, and several others.
This is why it’s important for your overall well-being to budget, and manage your personal and family expenses.
Many students and young adults are unaware of how to manage their finances. Financial literacy is starting to be mandatory in some states for secondary education. But most millennials were not taught the skills to adequately budget their own income later on in life.
What is money management and financial literacy?
Money management refers to how you handle all aspects of your financial life. This can include budgeting, investing, improving your credit score, paying off debt, or setting long and short-term financial goals. When done strategically, money management can ease stress and improve your overall quality of life.
Similarly, financial literacy refers to the practice of making wise decisions related to managing your personal finances. It also refers to coping with the mental toll that comes with money management, as concerns about money can trigger feelings of stress, anxiety, or even depression. There is a learning curve when it comes to managing your finances, and this process often takes time and energy.
Being financially literate allows you to feel confident with your spending habits. It enables you to ask the right questions when making large financial decisions. Which includes being comfortable with knowing when you need further clarification from a financial advisor, or anyone else who is managing your finances.
How to go about improving your own financial literacy?
While many people think they have a grasp on money management, they spend more than their families’ household income and fail to have an emergency savings fund. On top of that, many Canadians and Americans carry into their 30s and 40s vast amounts of student debt that hinders their ability to save for retirement.
To help ensure you’re making informed financial decisions, consider taking financial literacy courses online or in person. Learning the first steps to investing responsibility can help you learn how to grow your money, and hopefully see greater savings in the long run.
If you’re trying to organize your personal finances, it’s a good idea to talk to a professional financial advisor who can answer any questions you might have. With the help of a professional, you can put together realistic, short and long term plans for managing your finances. As well as learn to adequately contribute to your retirement, plan your estate, and nominate successors. Additionally, continuing to see a financial specialist can aid you in updating your financial plan as your income and financial situation changes over the years.
If you’re hoping to manage your financial situation on your own, there are several resources available online. Subscribe to financial newsletters, listen to money management podcasts, read accredited books and articles, and talk to those around you about their budgeting strategies and personal finance knowledge.
If you’re nervous about investing with real money, you can use StockTrak to practice investing with a virtual portfolio, so that you gain the skills necessary before jumping in with your hard earned cash. We also have a personal budgeting game to help reinforce good habits like contributing to an emergency savings fund every month.
If you would like your college to launch a campus wide financial literacy program, contact us to learn how to get started. That way everyone at your school can graduate with all the skills to succeed!
Why does financial literacy matter?
According to an article on Forbes.com, learning financial literacy serves the whole community, not just you as an individual. With increased financial literacy comes more jobs, more income that comes back into the economy, and less national debt.
The article also notes that positive attitudes toward money can lead to an increased desire to give back. This can be seen in the form of donations or by providing business to local entrepreneurs. In the long run, investing in your own financial literacy benefits more than just you.
Learning to be financially literate is not about getting rich quick schemes. Nor is it about encouraging all saving and no spending. Instead it promotes being aware of your financial situation and looking for ways to continuously improve. With the goal of having financial stability and peace of mind. And yes, to one day be financially independent!