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What Is Financial Literacy?

What Is Financial Literacy?

What Is Financial Literacy?

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Financial literacy is undeniably one of the most important skills you can have, but unfortunately, it’s not a skill commonly taught or even discussed in schools. Because of a lack of knowledge and basic understanding, many people struggle to manage their finances, pay off debt, plan for a comfortable retirement, and invest in the stock market or other investment opportunities. Fortunately, resources are readily available to people who genuinely want to learn and attain personal financial literacy. Financial literacy is a buzzword these days. But what exactly does it mean? In honor of Financial Literacy Week, we’ll cover the basics and why it’s essential.


What is Financial Literacy?

 
Financial literacy is defined as understanding and effectively using basic financial skills, including personal financial management, budgeting, and borrowing responsibly. Financial literacy gives you the material to lay the foundation for your relationship with money, and being financially literate is knowing how to manage your money. On the journey to financial literacy, you’ll learn:
  • How to pay your bills
  • How to borrow and save responsibly
  • How and why to invest
  • How to plan for your retirement
 
 Financial literacy is a lifelong learning process and is important for future success.
 

Managing Money Effectively

 
Financial literacy equips you with the knowledge and skills needed to manage money effectively. Start with the basics of money management to self-educate and grow your financial knowledge. Over time, you can mature into a savvy spender. Money management includes paying your bills on time to build and maintain your credit.
 

Maintaining an Up-to-Date Budget

 
A budget is just a spending plan. Creating a budget doesn’t need to be complicated. If you don’t like math, various apps and online tools can help you generate a budget based on your expenses and income. The amount of detail in your budget is entirely based on personal preference, and it can be as broad or specific as you want.
 

Borrowing Responsibly

 
In no area of one’s financial life is financial literacy more important than when it comes to borrowing money. Nearly everyone needs to borrow money to pay for significant expenses at some point. Although it’s always best to have money set aside for a rainy day, it’s not always possible. Sometimes you need to take out a loan or a line of credit. You can navigate the financial system smoothly when you understand lending and credit. It’s essential to learn what you can afford to pay and not get in over your head. Looking at the interest rates and terms is crucial when borrowing money.

A SAIL Loan (Savings and Installment Loan) is an ideal option for someone who needs to build their savings or money for an unforeseen expense or emergency. SAIL Loans let you know the interest rates and the amount you’ll be paying back after interest, so there are no surprises. At SAIL Loans, the goal is to help customers save and thrive financially, not trick customers into getting further into debt. You can apply for an installment loan online to build your savings today.
 
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