Education: Fundamentals of Financial Literacy

Everyone has different dreams and life goals. For example, studying abroad, starting our own business, having our own house, buying a nice car, traveling the world, or retiring early to focus on personal interests.

No matter what our dreams are, ultimately, we would need money to achieve them.

Unless you’ve just won the lottery, most of us would need a plan to save, budget and invest, to make our dreams come true. Therefore, financial literacy is a cornerstone of our lives and our dreams. With the right personal finance knowledge, we can actively influence our financial wellbeing and shape our financial future.

How to become financially literate?

“An investment in knowledge pays the best interest”, wrote Benjamin Franklin, one of the founding fathers of the United States of America, in the country’s first financial advice book. What was valid in 1758, and still holds true today, is the correlation between education, financial knowledge, and the return on investment, literally.

It comes as no surprise that in order for us to increase our knowledge and skills, education is the answer. Lucky for us, modern technology has made it much easier to access financial education, to increase our knowledge and understanding, and even to practice our skills.

We’ve got a few ideas on how to you can improve your financial literacy:

1. Listen to finance podcasts

Do you like listening to the radio? If yes, then listening to personal finance podcasts is a great way to expose yourself to financial education and “get your foot in the door.” Podcasts are portable, on-demand and easy to consume. You can download episodes of your choice straight onto your phone and listen to them whenever and wherever: while walking your dog, grocery shopping or being stuck in traffic. You can learn about a wide range of financial topics on the go.

Some of the most popular finance podcasts for beginners are:

2. Read educational blogs

If you learn better through reading, look for useful financial blogs, such as “Four Pillar Freedom” to help you set money goals and get a step closer to financial freedom. How much time is your financial literacy worth to you? Well, it depends on how much you want those dreams to come true! Take advantage of those rainy weekends or start a new morning ritual to learn more about personal finance and start making better money decisions.

Get a head start by checking out these blogs:

3. Read highly proclaimed finance books

There are a lot of excellent books out there that help develop financial literacy and achieve a certain money mindset to get you closer to your financial goals. Reading books – such as “Rich Dad Poor Dad” by Robert Kiyosaki – can fundamentally change your views on money and wealth. Let the books inspire you, give you tips on how to better manage your spending, (parents take note!) how to avoid student loans or learn all about credit reports and credit scores.

4. Take an online course

Want to take your financial education to the next level? Enrol in a personal finance course. Online courses often offer more structured and social ways of learning, not to mention expert instructors that you can interact with. An open (free) online course offered by Duke University, Behavioral Finance is the study of financial decision-making to help us overcome biases, inaccurate “mental shortcuts” and ultimately financial decision-making errors.

If you want to cover a full range of personal finance topics from saving to investment, from housing to taxes, check out the Personal Finance Course Khan Academy.

More suggestions:

5. Play games to learn financial skills

“Tell me and I forget. Teach me and I remember. Involve me and I learn.” If you feel the same as Benjamin Franklin, we’ve a good one for you: game-based learning. The acquisition of financial knowledge doesn’t have to limit to noninteractive channels, serious text and complicated equations. Games provide us with a fun and motivating environment to learn, practice and improve our skills. From Monopoly to CASHFLOW Classic (“How Fast Can You Become a Millionaire?”), from Animal Crossing: New Horizons to Visa NFL Financial Football, games have always been a natural way for us to learn, so why not learn about personal finance and improve your financial literacy while having fun in a immersing environment that you enjoy?

At Tradelite, it is our mission to bring relevant financial knowledge, real financial information and live data into real video games (not a gamified classroom), to make the financial world accessible and enjoyable for everyone. Our financial entertainment (FE) games teach financial concepts via intuitive, interactive and fun gameplays; and provide low risk environments for practicing your financial decision-making skills. The goal of Tradelite’s FE games is to empower the players with relevant knowledge and confidence to tackle the challenges of the financial world.

Conclusion: Take your financial literacy into your own hands and make your dreams come true

All of this helps achieve long-term financial goals and success:

• Invest in your financial knowledge:
  your financial literacy is key to your financial wellbeing.
• Start now:
  tune in to a podcast, pick up a personal finance book or download a finance game! Pick up your financial education where you left off.
• Get in a routine:
  be it hourly sessions or bite-sized learning, find the channel and the routine that works for you.
• Practice what you’ve learnt:
  you don’t become successful through knowledge alone, but through applied knowledge.
• Be patient:
  “every journey begins with a first step” and financial literacy certainly doesn’t happen overnight.
• Have fun:
  financial education and personal finance management are lifelong affairs, so don’t forget to have some fun along the way.
  
  

FAQ

What is financial literacy?

According to OECD, financial literacy is “a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.”

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What are the main components of financial literacy?

Financial literacy is the cognitive understanding of personal finance management topics such as earning, saving, spending, investing, budgeting, borrowing and protecting.

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How do I improve my financial literacy?

Start to invest in your financial knowledge by informing yourself, learning, practicing and getting feedback from trusted sources.