The Importance of Financial Literacy
With the current state of the stock market, I’ve been thinking a lot more about financial portfolios and my overall understanding of personal finances. Growing up and working part-time jobs, I learned to manage money but on a much smaller scale that focused on short-term goals with very little to no savings. It wasn’t until after graduating college and starting a full-time job that I began to understand the importance of financial literacy and the key components that contribute to managing a financial portfolio. On a very broad scale, personal finances can break into three goals each with a skill that helps to support and achieve each goal…
Goal 1: Become/remain debt free
Skill 1: Track and analyze spending habits to drive realistic budgets on a biweekly or monthly basis
Goal 2: Achieve financial goals – short and long term
Skill 2: Set short-term and long-term goals to save for and work toward obtaining
Goal 3: Set yourself up for success to enjoy retirement
Skill 3: Develop knowledge around investing so the money can grow instead of sitting in an account
Not only is it important to work on these skills, but you also have to continue building your knowledge of the details of each. For example, when thinking about goal setting, are your timelines realistic? Are you contributing to these goals consistently? Are you setting aside enough to reach these goals? Or when it comes to investing, are you staying up to date with the stock market? Have you weighed all investment options? Are you maximizing your opportunities to invest?
Since financial markets are ever-changing, it’s important to maintain and refresh your own knowledge every once and a while. What are some ways you develop your financial literacy understanding? Are there any saving strategies you’ve found that help set you up for short-term or long-term success? I’d love to hear your thoughts. Feel free to message me on LinkedIn or shoot me an email at firstname.lastname@example.org.
Christina Lavin, Research Analyst