Hello Friends and Family! Today it was a beautiful and snowy day where I am. While the snow was gorgeous, I don’t walk outside in that weather. So, I did my daily walk on an indoor track and I ended up chatting with a fellow walker. While discussing our passions, I was asked, “What do you mean by financial literacy?” If you are new to my blog, you may be wondering the same thing. So, today, that is what I am going to write about.
But, before I do that, I want to say thank you for visiting my blog. My goal is to share as much information about financial literacy and personal finance as possible, and to hopefully help as many people as possible. So, I really appreciate that you are here.
What is financial literacy and why is it important?
Financial literacy is understanding how money works and the ability to make wise financial decisions that help you achieve goals for you and your family. There are many things that you need to know in order to be considered financially literate.
What are the things that you need to know in order to be financially literate?
Being financial literate involves, at a minimum, these 20 things:
The First 10
- Budgeting: A lot of people struggle with this. But, you must be able to budget. It is basically how you manage your money.
2. Basic Taxes: You have to know how and when to file your taxes.
Also, you have to understand how taxes affect your income and
how it affects the building of your net worth.
3. Assets vs. Liabilities: You have to understand what an asset is and
what a liability is.
4. Wants vs. Needs: You have to understand the difference between
wants and needs, then not treat the latter like the former.
5. Banking Options: You need to know about local banks, online
banks, and credit unions.
6. Saving vs. Investing: You need to understand the difference
between the two.
7. Emergency Account: You need to know the purpose of an
emergency account and how to build one, and then actually build
one.
8. Sinking Funds: You need to know the role of sinking funds in your
budget.
9. Credit: You need to know the importance of having great credit
and how to build it.
10. Income: You need to know what income is and its various forms.
The Rest
11. Passive Income: You need to know what passive income is and its
significance to you, and how to get started with it.
12. Expenses: You neeed to know what expenses are and what yours
are.
13. Personal Cash Flow Statement: You need to know what it is and
how to create one.
14. Equity: You need to know what equity is and how it relates to
building wealth.
15. Basic Social Security: You should know at least the basics of how
to qualify for social security during retirement, and understand
what position it is designed to play in your retirement.
16. Frugality: You should understand how frugality can help you and
have some ideas of how to be frugal.
17. Interest vs. Dividends: You should understand the difference
between interest and dividends and the role each play in your
financial portfolio.
18. Spending vs. Earning: You need to know the importance of the
relationship between these two.
19. Debit Cards vs. Credit Cards: You need to know the difference
between a debit card and a credit card and when to use each.
20. Fixed vs. Variable Expenses: You need to know the difference
between fixed and variable expenses.
How Can You Learn Financial Literacy?
You can learn financial literacy by reading. Start with subscribing to the Rich Mom Poor Kid Blog. Read the Rich Mom Poor Kid blog every week. Share the posts with your friends and family. Then spend time thinking and discussing the posts’ topics with your friends and family. Internalize the concepts.
Do you want to read more from a mom who writes to inspire financial independence by age 30?
Here are more posts on financial literacy:
Uh-Oh! Did You Forget Everything That You Learned In Your Financial Literacy Class?
19 Signs That Your a Financially Educated Person
Here are some other posts that you might enjoy:
Spilling the Tea on Five Things I Don’t Spend Money On
A Secret To Success (One Secret That Is Not Taught In School)
That’s all for today. Again, thanks for being here.
I hope that you found this information helpful. If you did, please subscribe and follow, so that you won’t miss new information as it’s published.
Wishing You Abundance,
Rich Mom
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Who is Rich Mom?
If you are wondering who Rich Mom is, check out my “About Rich Mom” page.
Also, please note: I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also, remember that past performance is not a guarantee of future performance.
The information shared here is not intended as financial advice, just entertainment and encouragement.