All of us have been taught from a very young age to wear our seat belts. This will help us be safe in the event of an auto accident. Kids have also been taught to use technology to aid and assist them in their education and academic endeavours.
However, how many of us have been taught about issues that concern our personal finances. We are talking about terms like interest rates, debt, credit card repayments, and mortgages and so on. In the absence of financial literacy, most of us commit serious mistakes.
The effects of these mistakes are grave and stretch from generation to generation. In this article, Ladder Advisors helps us understand the basics of financial literacy. They tell us why financial literacy is important as a life habit and how we can bring financial discipline into our lives.
Ladder Advisors on why Financial Literacy should be an important Life Habit
It is important to understand that our finances have a direct impact on ninety percent of our lives. They also have a strong impact on our direct and personal relationships.
According to psychologists and counsellors, millions of individuals and families report unhealthy relationships because of personal finance issues. This includes break down of marriages, increase in divorce rates and relationship strife between parents and children.
Most people fail to understand that accumulating debt and being in debt is a lifestyle choice. Yes, there might be unavoidable reasons for debt, like a health emergency, but there are ways to prevent that as well. If you are financially literate, you can build a positive personal and professional life for yourself and your loved ones.
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How to be Financially Literate by building Financial Discipline in 5 Steps
Invest in Savings and follow a monthly Budget-
Ladder Advisors mention that everyone, regardless of their earnings should start savings. They also recommend creating a monthly budget to help create a roadmap for all income and expenditure for the month.
Question yourself thrice before making an Expenditure that is not urgent-
Most of the times our unnecessary expenditures are the result of impulsive decisions. Hence, it is important to check ourselves. You can follow this simple exercise. Question yourself three times and stretch the period to a week. This will help you introspect and take the right call.
Do not give into Peer Pressure while making financial decisions-
It doesn’t matter who threw a birthday party where, or who went where on their honeymoon. Most people fall into debt because they want to be show-offs. Do not fall into this trap. Financial discipline dictates staying within your means at all times.
Use Credit Cards as judiciously as possible-
Even though the lure of using a credit card is great, it is best that we reserve its usage only for emergencies. This is because the rate of interest on any credit card is very high. Add to this exorbitant late payment fees and you are seeing a credit card debt cycle slowly happening.
Listen to Financial Experts and do your research-
It is always good to listen to what leading financial advisors have to say. Ladder Advisors say that availing the services of financial experts is very affordable, contrary to popular perception. You should also keep yourself updated at all times by following journals, reports, etc.
We are currently living in a world where we are more aware of unimportant things that we are on issues of personal finance. By keeping ourselves financially literate, we can prevent many problems like debt from being a routine part of our lives.
Can you think of some other ways, which can help us build good financial habits? Let us know in the comments section below.
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