Why Is Personal Financial Literacy Important?
A major roadblock to financial success is simply not properly managing the finances that you do have. Whether you’ve worked hard all your life, or you inherited a substantial amount of cash, financial illiteracy is a destructive force on your wellbeing. Successful money management, whether through basic monthly budgeting or targeted major investments, can change your life.
Financial literacy should start at a young age, but it’s never too late to learn. Here are just a few of the ways personal financial literacy can improve your life.
A Few Ways Financial Literacy Can Improve Your Life
It Encourages Informed And Thoughtful Decision-Making
Earning money is one thing. Knowing how to use it well is quite another. Basic personal financial literacy means understanding how banks work, but also which accounts may be best for you.
It means understanding how debit and credit cards work, but also the importance of paying off a balance, how interest works, and the intricate details of multiple types of cards. It addresses not just how to invest but when and why.
It appears that most Americans struggle with knowing financial basics. A Financial Industry Regulatory Authority survey recently found that just 34% of Americans knew four out of five financial concepts, including inflation, bond prices, compounding, diversification, and interest.
It Leads To Self-Sufficiency
Financial literacy goes beyond basic financial concepts and principles, but all aspects have one end-game goal: financial stability through avoiding bad financial decisions. This starts with budgeting and then moves on to long-term financial planning. Understanding compound interest, for example, helps people avoid debt.
From basic financial literacy, you can expand to mastering more complex topics, such as the time value of money, which are core financial principles that help create and sustain financial stability.
It Helps You Prepare For Retirement
Company pension plans used to be the most common way people saved for retirement. That approach has almost completely vanished from the benefits employers offer. Now that 401(k) plans are the standard, employees need to know more about the plan than just being a number on a paystub.
Mastering the investment options and levels of contributions within 401(k) significantly contributes to a worry-free retirement. If your employer does not offer such a plan, investigate alternatives like individual retirement accounts (IRAs).
It Makes It Easier To Save
Savings are essential in both good and troubled times. Once you understand the type of bank accounts available, creating an emergency fund will come naturally. That is important; emergency funds are vital when faced with such hardships as car repairs, job loss, or hospital bills.
Financial literacy also means knowing how to maximize your savings, including setting it aside from an existing bank account you use regularly for payments, and how large your account should be at any given time to make sure you can cover emergencies.
It Makes Complexity Less Intimidating
Financial management isn’t easy, even when it comes to the basics, but in an increasingly complex financial environment, you can control your money in the present and feel confident in the future. Financial literacy helps you to understand all the options at your disposal, including knowing the deals of maturities and interest rates inside and out. Navigating these complexities will no longer be an educated guess. You will become an effective decision-maker in all aspects of your financial plan.
Personal financial literacy is now an expansive concept. It is often subject to the whims and trends of the global marketplace and the ever-changing economic climate where we live. With investment options more inclusive and numerous than ever before, personal financial literacy can give you the power to navigate even through the most complex financial changes.
It Helps You Weigh Different Approaches
A big part of personal financial literacy is being prepared when an emergency strikes. It also means knowing all your options, including a title loan.
A title loan is designed specifically for financial emergencies, such as not being able to pay your rent or being faced with an emergency room bill. Title loans are not designed to help with long-standing financial difficulties.
By using your vehicle title as collateral, you may qualify for up to $15,000 in cash from Southwest Title Loans. It can take as little as 30 minutes to qualify, and you keep your vehicle for the duration of the loan.
We make the process easy. Fill out the title loan inquiry form on our website and a loan representative will give you a quick call to discuss the few items required to qualify for a loan and guide you through the entire process.
Once you qualify and are approved, you will receive your money the same day or the very next business day.
Get A Title Loan Today
Personal financial literacy means taking back control of your money and using it wisely in the future. You can get on that confident path by taking care of a financial emergency with a title loan. Simply start the process online, give us a call, or visit us today to help get back on track.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.