Financial literacy is what separates a rich person from a poor person. Statistics say that if a financially literate person does not have money, he will soon have it. And vice versa, if a financially illiterate person has money, he will surely lose it soon!

In simple terms, financial literacy is a sufficient level of knowledge and skills that allows you to make informed and effective decisions in various areas of personal finance management, such as savings, investments, real estate, insurance, tax and retirement planning. Financial literacy also includes a deep knowledge of such financial concepts as personal financial planning, compound interest, the mechanisms of work of credit instruments, effective methods of saving, consumer rights, as well as an understanding of the relationship between various economic processes and events.

Lack of financial literacy can lead to unwise financial decisions that can adversely affect a person's financial condition and even drive him into debt. Therefore, in developed countries, governments create special educational resources for people who want to become financially literate.

Modern research shows that financially literate people are more efficient and successful in life, regardless of in which country, in what positions and in what area they work. It is safe to say that knowledge of the basics of financial literacy improves the quality of life and positively affects the well-being of people. That is why teaching financial literacy concerns everyone personally!

The need to educate the population in financial literacy has become evident at the state level only recently. Before that, many people managed to step on the "rake" of financial illiteracy and lose their savings in various financial pyramids due to the global financial crises in 2000 and 2008.

Nevertheless, financial literacy still remains at an extremely low level, because there are catastrophically few qualified specialists able to teach people the basics of financial literacy. Fortunately, now on the Internet you can find enough information in the form of books, articles and publications and independently improve your financial literacy. Remember, your well-being is directly related to your level of financial literacy.

What a Financially Literate Person Should Do

1. Maintains a balance between consumption and investment.

Living well today while saving and investing enough money to ensure a comfortable future is not an easy task. If you do not save anything for the future, then a miserable beggarly pension from the state awaits you. If you save and invest to the maximum, and now live from hand to mouth "on bread crumbs and water" - there is a risk of not living up to that "bright future" or paying too high a price for it - in the form of a hated past. Therefore, it is very important to maintain a "golden mean" that will allow you to live comfortably now and not worse in the future.

2. Manages personal finances effectively. Plans income and expenses in advance.

Nowadays, there are various services for tracking income and expenses, such as Easyfinance, Homemoney, Drebedengi, Zenmoney, etc. All of them allow you to enter information on expenses and income from the phone screen in just a couple of minutes a day. If you do not want to trust this kind of information to various third-party services, you can use the usual Excel file. At the same time, it is important to plan expenses for the next month, as well as conduct an analysis, compare the plan with the fact for the past period. 30 minutes a month devoted to planning and analyzing your personal budget allows you to find holes in the budget, determine where exactly money is flowing, and make the right decisions to increase the amount of money in your wallet.

3. Sets clear financial goals and successfully achieves them.

Who among us does not like to dream about an expensive sports car, a house on the seashore, a yacht or financial independence. The goal differs from the dream in that it has specific deadlines for implementation, cost, priority and a lot of other parameters. For example, “I want a house by the sea” is a dream, but “to buy a two-storey house with an area of ​​150 sq. meters with a garage and a swimming pool, two blocks from the sea on the southern coast of Spain, costing 250 thousand euros in 15 years "- a very specific financial goal. And if right now we start saving and investing in reliable instruments in the stock market at 598 euros each month with quite a moderate average yield of 10% per annum, then in exactly 15 years we will reach our goal and buy a house for 250 thousand euros.

4. She plans her future for 10-20-50 years ahead and follows her personal financial plan

If you do not have a plan for how to become rich, then most likely you are planning to be poor. You just don't know about it. " (R. Kiyosaki) The Personal Financial Plan (LFP) is your best friend and assistant in realizing your financial goals. Those people who follow a personal financial plan are guaranteed to achieve financial well-being. Working with LFP is built in several stages: • Analysis and assessment of the current situation: Income and expenses, Assets and Liabilities. • Setting goals and defining specific actions for their implementation. • Choosing the right financial instruments for each purpose • Implementation of the plan. • Annual analysis of the movement towards goals and adjustments to the plan.

5. Uses various financial instruments to achieve various goals.

Nowadays, there are hundreds of different financial instruments available to a wide range of people. All of them have different properties and parameters, such as profitability, reliability, stability, liquidity, recommended investment period, entry threshold, etc. Obviously, it will not be possible to solve short-term financial problems with the help of long-term instruments - for example, if you know that you will need money within 3 months, you should not now run to buy an apartment or invest it in a bank.

6. Has multiple sources of income.

Having only one source of income these days is very dangerous, especially if not only you, but also your loved ones depend on this source. In this case, you are putting yourself and your family at too great a risk. When a person has several different sources of income, his life is much more comfortable. The feeling of stability, security and confidence in the future of your family is invaluable. The benefit of creating new sources of income is also evidenced by the fact that with the growth of the number of various sources, the amount of money that comes to you on a regular basis also increases, and therefore the standard of living and well-being rises. Financially literate people try to create 1 new source of income every year.

7. Work with financial advisors and advisors.

"One is not a warrior in the field" - this proverb says that on your own you will not be able to master all the milestones of our information world. The innovative financial advisor service is already available to all segments of the population, whether you are investing $ 1000 or one million.