Financial planning is a key component of successful money management. When financial plans are established and put in place, individuals are in much better position to achieve both short-term goals, like financing a dream vacation, and long-term aspirations, like retiring with enough money to live your golden years without worry.
No one is born knowing how to handle and manage money. Financial literacy is an acquired skill, which means anyone can learn how to manage money effectively. The following are a handful of ways individuals from all walks of life can improve their financial literacy.
Crack the books (and magazines). A wealth of resources are available to anyone looking to become better at managing money, and many of those resources are books and magazines. Printed works are available for people with varying levels of financial literacy, so it’s unlikely that any single text or magazine will benefit everyone equally. Find a text that speaks to your level of literacy and build from there.
Pay attention to financial news. The days when financial news was limited to industry insiders or a handful of industry publications are long gone. Various online entities and cable television channels are now exclusively devoted to financial news. Anyone can benefit from paying attention to financial news, which can shed light on investments, real estate and financial industry trends that can help people better understand their portfolios and assets.
Read your emails. Adults who already have retirement accounts and other investments may also have an invaluable resource right inside their email inboxes. Investment management firms like The Vanguard Group, Inc., routinely host online information sessions and discussions for investors that are promoted through email and other lines of communication with account holders. When promotional emails announcing these sessions are announced, take note and resolve to participate. Many don’ require active participation, but they often provide insight into financial products, markets and strategies to successful investing.
Ask questions. It seems simple, but one of the most effective ways to gain greater financial literacy is to ask questions. If you work with a financial planner or are interviewing professionals to help you manage your money, ask that person to explain their financial strategy and the strategy espoused by their firms. When a new short- or even long-term goal pops up on your radar, ask your financial advisor to explain ways in which you can achieve that goal. Such discussions can reveal strategies that even well-informed individuals may be unaware of.