Wednesday, 24 February 2016

Top 5 secrets to become Financially Savvy

For you to become financially savvy, you have to get a foundational knowledge of Financial Education and its importance.
 



Financial Education can be defined as a type of education that equips and inculcates into individuals the knowledge of managing and investing their money and how to prioritize their monetary priorities. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and
effective decisions with all of their financial resources. However, this type of education cannot be overemphasized. This is to ensure that people can be able to manage and invest their financial resources. Below are some of the importance of Financial Education.


The knowledge of financial matters helps one to set a financial goal. Financial goals are list of things intended to be achieved with your finance. These goals includes what to buy, how to buy them and when to buy them. However, this helps one to plan ahead of time.

Financial Education in one way or the order helps to impart into the lives of individuals the act of saving. Savings refers to the disposable incomes that are not spent on consumer goods and services. Financial savings determines the future financial status of every individual and in other words makes people become financially alive.

However, the knowledge of Financial Education has helped individuals to flow in the realm of investment in company shares. Investment means involving or putting money in a business to earn another money which is sometimes higher than the one invested. One who invests his or her money in company shares is entitled to receive a dividend which can be be received by cash or reinvested to buy more shares in the company.

Financial Education has helped in the management of risk or insurance. However, you cannot completely eliminate risk – physical, emotional, spiritual or financial – but, in many situation it is possible to manage it, and in some areas protect yourself from a variety of risks. In the context of financial Education, risk management includes understanding the wide variety of insurance protections that are available to meet your personal needs. In other words, insuring your business helps you to reduce the amount of money you spend and thereby keeping you free from unwanted financial regret.

Finally, the future of any country depends on their citizens. A country filled with financial illiterates deteriorates the economic growth of such a country. In other hand, a country filled with financial literates expedite the growth of such a country. Financially educated citizens can help to ensure that the financial sector makes an effective contribution to real economic growth. 

Also, Financial Savvy can be defined as the practical knowledge and ability to comprehend, manage and invest money. Below are the ways one can become financially savvy.

#1:   INVEST
Almost everybody on earth wants to get money at all cost. Its simple. To maintain a good financial standard and savvy, you must be able to invest. Investment is not the spending of excess money rather it means using your disposable income to attract more money to increase your personal income. Economists defined it as the expenditure on physical assets which are not for immediate consumption but for the production of consumer goods and services. This is what differentiates you from a poor man. ‘‘An investor or a rich man will invest all he has and spend what is left, while a poor man spends all he has and invest what is left ". Life is all about investment. Financially Savvy people invest their money, time or opportunity in order to maintain their standard.

#2:   EARN
Of course this cannot be exempted. Earning money after investment is a priority. And the fact is, earning passive income is best when there are many sources. Financially Savvy people don't depend on one source of income. This is because anything can happen to your one and only job- it may collapse or you may be sacked. Am not trying to discourage you from your job, but, that's life for you. When you have many sources, it increase your chance of amassing wealth and becoming financially independent.

#3:   SAVE
An important key to Financial Savvy is the ability to save. Saving is not just protecting your money in any financial institution rather it is reducing the rate of your consumption expenditure or reserving part or all of your income for future purposes ( which may be for transactive, precautionary or speculative motives ).

#4:   SPEND LITTLE
I always hear people saying that ‘‘ to earn money is difficult but to spend is the easiest thing in life’’, and that's the truth. The worst thing that can happen to your financial life is being extravagant. Financially Savvy people spend little, invest and then save. Don't spend much money when you know that you cannot even get double of what you've spent. The difference between rich men and poor men is that the rich plan how to spend while the poor just spend on anything that comes their way.
 
#5:   BORROW LESS
This principle is very important for you to become Financially Savvy. Mistakes people usually make is that when they don't have enough money to startup a business or their account have gone red, they will go and borrow huge sum of money which they cannot even refund. Before you borrow money, think about what you are going to do with the money, its consequences when you don't pay at the appropriate time, and how to refund when you've gotten enough money. In order words its always advisable to borrow less whenever you are bankrupt.

However although this article is lengthy, at least  l have been able to diversify your knowledge about Financial Education and how to become Financially Savvy. I have taken enough time to write this because of our society. The society is dilapidating. Parents and guardians no longer care about their finances. I believe you have been inculcated the knowledge of  financial education. Now try to live it out. Becoming financially savvy is practical where money is the specimen.
zealmatblog

1 comment:

  1. its awesome.
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    ReplyDelete

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