Money is our current method of exchange that allows us to obtain what you need to survive and to live. Everything around us costs us money: the house we live in, the clean water we use, the electricity, the food, the clothes, even going out to eat or watch movies. The whole world revolves around money, and although it is often said that ‘money does not make you happy’, the truth is, in reality, most people would disagree.
Why do I need to know about money?
As previously mentioned, money is a big part of everyone’s lives. The amount you have will dictate what kind of life you have, the more you have, the more and better opportunities and experiences in life you are likely to have. People who do not care about understanding money, or do not take the time to learn about it, are often identified as financially illiterate. Financial literacy is a set of abilities and financial intelligence that allows people to make sensible decisions about their money. Not only how to best save money and how to make more of it in legitimate ways, but also how to avoid the monetary issues a big part of the population faces, such as debts and lack of preparedness for financial emergencies.
People work for money to be able to afford goods, and although money is a part of everyone’s lives, not everyone can say they understand a lot about money. There are so many different things to learn about money, from the different currencies in the different countries, which you can learn more from if you visit ExchangeRates.org.uk, to the simple tax everyone pays at the end of every month. Here in this article, we will discuss the basic things you need to know about money.
What You Need To Know
1. Budgeting
Budgeting sounds basic and simple, but it is one of the main reasons why people find themselves living paycheck to paycheck or even drowning in debt – some people do not have the ability to consider the pros and cons of their actions on their financial situation in the long term. Being able to properly manage your finances and budget your money, where you only spend money you need to spend, will allow you to live a more relaxed life not only today but also in the long-term.
2. Emergencies
Financial literate people are often proficient in preparing themselves for emergencies that will financially set them back. For those individuals who are already struggling financially, having any costly emergency will seriously impact them and potentially increase their debt and financial strains.
3. Importance of Understanding Interest Rates
An interest rate is a percentage charged on any money you borrow or save, this could be a mortgage, savings account, or credit card. Even a small change in interest rates can have a big impact, therefore it is imperative to understand this concept as it can help you to save more and make smarter financial decisions. Changes in interest rates affect the society in general as a whole as well as the foreign currency exchange rates.
4. Identity Theft Issues & Safety
This is an issue that not everyone considers, however, nowadays it is becoming more and more prevalent. As we live in a society where everything is digital and a lot of our information is stored online, your personal and financial information is more susceptible to fraud. If you are aware of this, you are more likely to take measures to prevent it from happening or at least reduce the possibilities of if happening.
What Can I Do to Be More Financially Literate?
To be financially literate and have a better understanding of the concept of money, you need to start by knowing what you are doing, where you are spending money and be aware of any debts you may have. You must set yourself a few financial goals, even if it is to be able to have enough money to go through each month. Whatever it is, if you have financial goals, you are more likely to thrive financially by recognizing what areas require improvement. If you decide to invest your money, ensure you understand the tax consequences of your investment as this will have a great impact on your overall returns. Finally, make a list of any financial topics you may need to learn more about and commit to learning about them to develop your financial knowledge.
Money is important to everyone, although not everyone knows much about it. The majority of people are willing to work for money and constantly pay for everything without understanding the concept of money and how you can improve your financial intelligence. This means that many people will struggle financially. Money does not have to be a complicated issue and if you learn enough about this concept, you may be able to get out of financial struggle.