Oh, the dreaded ‘M-word’ – money. Whether we like to admit it or not, money does have a significant impact on all areas of our lives. However, the good news is that the subject of money doesn’t have to be so daunting if you have a sense of financial literacy.
The concept of financial literacy is simple, and we don’t all need to be an economic enthusiast to understand what it is or to practise it. Here at Expert Pension Claims, we have come up with a guide that answers the question of what financial literacy is and why it is important. This guide will also outline the benefits of financial literacy and how financial literacy can decrease your chances of being a victim of financial mis-selling.
Financial literacy explained
Financial literacy is defined simply as being educated about money and finance. The first step to acquiring financial literacy is to have an understanding of the basic financial concepts that are out there. These concepts include the likes of insurance, credit, debt, and saving.
By knowing about these terms, you then have the means to make positive financial decisions. In other words, as a financially literate person, you have a solid awareness of how to:
- Practically create a budget
- Shop on comparison websites
- Calculate interest
- Evaluate loan terms
- Do taxes
Learning about these concepts and practising them is not as daunting as it may seem.
How to become financially literate
Luckily, there are plenty of resources out there to help better your understanding of financial literacy. Think of financial literacy as any other subject that you learned in school. Knowledge is power – so hit the books, do your Internet research, and listen to financial podcasts. Also, make sure you tune to the Martin Lewis’ annual ITV winter show that is all about saving your pennies and bagging the best deals.
What these resources will tell you is that it’s not enough to just know about financial literacy – you have to apply your knowledge to the real world as well! Financial literacy starts with you, and so it is a good idea to regularly review your money situation. Have a look at your bank statements, keep track of personal loans and go through your monthly bills. Possessing a solid understanding of your typical outgoings will give you more of the means to budget and to set long-term financial goals for yourself.
The benefits of financial literacy
As it seems, the benefits of financial literacy are huge and very rewarding. Being financially literate makes you feel empowered and confident about where your money is going. Also, and this is one that we at Expert Pension Claims like to stress, financial literacy reduces the risk of you being a victim of financial mis-selling. Yes, being financially literate means that you are less likely to fall into the hands of mis-sold pension compensation and SIPP mis-selling.
- Having years of experience, our expert advisors are more than happy to answer any questions that you may have about financial literacy.