One of the most important keys to improving your financial literacy is to be honest with yourself. You have to be able to identify with what you are doing when you do financial decisions. If you make bad financial choices, then you need to own up to those mistakes and own up to the consequences of them. That way, you can move on from there and make better financial decisions going forward. However, if you don’t make any financial mistakes, but still manage to get into debt, then you need to know your numbers and what you stand to lose if you do poorly. If you understand these things, you can work toward developing good financial literacy that will serve you well.
One of the first things you can do to improve your financial literacy is to make sure you know your numbers. This means you need to evaluate your relationship with money every single month. Are you still spending more than you make? Do you have extra cash stashed away for emergencies?
In order to help yourself understand your position with debt, you need to make sure you get a clear picture of your debt. Do you have the mortgage loan or auto payment minimums in mind? Do you see a big amount of debt on your credit card statements?
Is your debt mostly credit card debt or is it mostly a mortgage loan or car payment?
It is always a good idea to write down your monthly expenses, such as car payments and mortgage payments, so you can compare them with your income. If you can pay off all your debts before you get to your income, that will show that you have excellent money management skills. In case you don’t, it is important to learn how to do that right now. Otherwise, you will never be able to convince creditors to lower your interest rate or take other steps toward debt elimination. You need to convince them that you can make all of your monthly payments.
To improve your financial literacy, make sure you understand what a loan is, what a mortgage is, and how the bank determines your creditworthiness. You should also understand how the stock market works and why some stocks are cheaper than others and how the two factor into your overall financial situation.
Do you have ten credit cards that are all charging you a high interest?
Your financial situation can affect your long-term health, so you should take the time to learn about your health status and what you can do to improve it. It’s also a good idea to learn about your family medical history, especially if you are asking a lot of questions regarding your own finances. If you feel uncomfortable about asking questions or you think you may be mistreated, then don’t do it. This will help you ensure you only provide true information which will help you improve your financial literacy.
Couple of credit cards and maybe one credit card that are actually paid off?
Another thing you can do to improve your financial literacy is to check your credit report from each of the three credit agencies at least once a year. You should go over it with a fine tooth comb, looking for errors, inaccuracies, and false positives. You should investigate in writing any items that you find questionable, and make sure that you get proof that the lender actually reported the information to the credit reporting agency. If you notice any errors, make sure you report them immediately.
In addition to checking your credit reports, you should also make it a point to pay all your bills on time. One of the most important ways to improve your financial literacy is to read through your monthly paycheck and make sure you know what you are spending your money on each month. Emergency funds can be extremely useful, but you need to use them carefully. You never know when they might become necessary.