7 Ways To Brush Up Your Financial Knowledge
Being financially savvy implies having the competence to efficiently save, manage, and invest money. It includes stuff like budgeting, opening the right type of accounts, getting rid of debt, planning retirement, and so on. However, the good news is that spicing up your financial knowledge does not necessarily have to be a time-consuming process. You can get smarter about your money by taking small yet meaningful measures such as listed below:
- Ask Around
Sometimes, excellent advice could come from the most unlikely avenues. Your friends, relatives, and colleagues may be interested in sharing their stories – particularly successful ones. With little heel-dragging, you might even spot a financial mentor within your inner circle who will provide free advice.
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- Get Enrolled In A Course
Embarking on an academic pathway can help you improve your financial literacy. Keep in mind that free courses have their own drawbacks, and there is a limit to how much you can trust them. Also, make sure you narrow down your focus on a specific subject. For example, a quality course in financial modeling might be highly beneficial if you run a business. The course will teach you how to visualize financial information and engage in investment analysis using Excel.
With that said, if you want to take your financial knowledge to the next level, you are better off getting enrolled in CPA. Unlike the common assumption, cracking CPA is not as difficult, more so with the online CPA review courses offered by Wiley CPA and other such educators.
- Get Your Head Around Loans
A vast majority of people take loans to pay for things they would not be able to buy otherwise. While borrowing can be beneficial, it can also prove to be a formidable foe along the way. So before applying for your next loan, ensure you understand how loans work in the first place. It will add to your financial knowledge big time. Though not all loans function in the same way, you should prioritize learning the following basic concepts of the lending industry:
- Credit score: For lenders, a credit score is hands down one of the most critical variables in analyzing a loan application. Before approving a loan application, many lenders demand applicants to have a credit score of roughly 600.
- Interest rate: It is the fee charged by the lender for the usage of their funds. The interest rate is a modest proportion of the loaned amount in most cases. Typically, the interest rate is divided into ‘fixed’ and ‘variable.’
- Collateral: Collateral pertains to the assets the borrower wants to use as security for the loan. It provides lenders with a safety net in the event of a default. In simple words, if you default on the loan, you risk losing any assets provided as collateral.
- Term: Borrowers must pay back a loan over a specific period. This duration is referred to as the term. One to five years is the typical borrowing tenure for personal loans. On the other hand, ten-year repayment terms are common for student loans.
- Make The Most Of Financial Management Tools
Using a financial management tool is another key step in gaining financial literacy. There are numerous online software to track your spending by connecting them to your bank accounts, credit cards, and mortgage. Besides, you may also lay down a budget and then effortlessly track how well you are sticking to it with the help of money management tools.
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- Capitalize On Free Financial Resources
There is no shortage of free financial resources if you know where to look for them. For example, your bank, credit union, and credit card issuer may be keeping an eye on your purchasing habits via a website or application.
You can use them to determine your shopping habits and make conscious efforts to improve them. Multiple major credit bureaus also offer free credit score reports. An instant snapshot of your credit report can give you a better aerial view of your credit score. So if you are falling short of an ideal credit score, you can take measures to improve it before it’s too late.
- Take Advantage Of Magazines, Newspapers, And Seminars
A person can learn a lot just by reading a business newspaper or magazine. This is especially true in the area of personal finance, where newspapers and magazines play a critical role in providing detailed practical suggestions. Apart from that, attending seminars is another excellent way to get knowledge. Financial seminars are held in most places across the country.
They are hosted by a variety of stakeholders. While some of them are free, others charge you a small amount. The biggest upside of seminars is that they enable you to connect with financially savvy individuals.
- Listen To Podcasts
For many people, it can be difficult to set aside time for reading. Among other things, you may have a hectic work and family schedule, which makes podcasts a great alternative for them. That is also a big reason why podcasts have virtually exploded in popularity of late. There are plenty of good ones to listen to while going to the office, doing house chores, or even at work, provided it does not hamper your productivity.
According to credible studies, up to two-thirds of Americans lack basic financial literacy. This is one of the several reasons why many people are still struggling to make ends meet in the aftermath of the ongoing pandemic. We would highly recommend you walk the tight line of the tips listed above to enhance your financial literacy and live a fulfilling lifestyle.