Since personal finance is an entire course in college, you might think that you won’t be able to learn it without going back to school. This isn’t necessary. There are a plethora of resources—both online and offline—that you can use to enhance your financial literacy. You only need to comprehend the basic things to be able to manage your money well. We give a preliminary list below—you can always expand to other concepts as your knowledge becomes more sophisticated.
1. Budgeting. Knowing how to allocate your money, how to use a budgeting tool, and how to keep track of your budget are important first lessons in money management.
2. Credit and how it works. Credit is a regular part of our lives that we take it for granted. However, those car loans, mortgages, and credit cards come at a cost and it’s vital that you understand what these are. Related topics are credit reports, and credit scores.
3. Savings. Having an emergency fund for life’s most mind-numbing and pocket-emptying blows helps you ride out these threatening financial storms. Knowing the various types of savings accounts, their interest rates and fees, and the best banks to put your money are just some of the things you need to learn.
4. Investments. Savings are not enough. You also need to get acquainted with the various investment tools like stocks, bonds, and mutual funds and how they affect your financial situation. These investments are also crucial to helping you form a nest egg that will also secure your retirement.
5. Insurance. We buy insurance coverage to transfer the risk we would otherwise take for ourselves to the insurance company. Insurance firms give coverage for health, life, cars, and homes, just to name a few. There are many things to consider before you buy a policy and knowing what to look for is crucial if you want to get the most of the premiums you are paying.
6. Managing debt. This is one of the most crucial lessons that you need to know, especially if you are saddled with heavy financial obligations. Freeing yourself from debt is a must if you want to achieve true financial stability.
7. Filing taxes. You can’t escape taxes but you don’t necessarily have to pay more than what you really need to. Besides, you can lower your tax obligations by claiming exemptions and deductions. Whether you file your income tax yourself or depend on a professional to do it for you, learning about the intricate and complicated rules related to taxes forms a very integral part of your journey towards financial literacy.
8. Estate planning. It is your responsibility to ensure that your assets and wealth will go to the special people in your life you intend them to go to. You might not think that you have enough to warrant the preparation of a will but if you die intestate (that is, without a will) state laws will determine how your estate will be divided. The earlier you know about the basics, the more prepared you and your family will be in case you pass away.
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