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Do you feel like you have a good level of financial literacy? If not, you’re not alone. Much of the UK struggles with this topic with just 5% of the nation able to answer questions about common areas of finance, proving that it’s a huge problem.
A lack of finance skills can do untold damage to people’s personal money with it becoming easier to fall into debt and taking longer to save towards a dream of yours. Financial literacy is especially important given the UK’s economic uncertainty as we fell into recession towards the end of 2023.
Now is the perfect time to expand your knowledge surrounding this topic area, so you can stay in control of your finances. Our useful guide below offers simple ways to develop your skills, so continue reading to find out more.
Become a better budgeter
Budgeting is one of the easiest skills to learn and it’s never too late to start. Proper budgets allow you to pay bills on time, live a fun life and put money aside for the future. However, what many people don’t know is how much of their wage should go on each of these things.
Beginner budgeters thrive using the 50/30/20 rule. This puts 50% of your wage towards needs such as bills or rent, 30% on wants like meals out and 20% into savings. This can be applied to most wages and is a great first step.
Know how to manage debt
Debt is a scary thought and anyone can go through difficult times. It’s all about knowing how to get out as fast as possible. We recommend prioritising the debts with the highest interest rates first as paying these off reduces the amount of interest owed.
You could put your outstanding balances in one place by taking out a bad credit, debt consolidation loan too. This lets you pay off all your debts in one go, leaving you with one loan left to pay. By doing this, you can manage your debt in one convenient location.
Learn how to invest
Investing can seem daunting to begin with but it’s relatively straightforward once you learn more about it. Books, podcasts, TV shows and talking to industry professionals can help you develop your knowledge quickly too, so you can get started sooner.
There are plenty of different investment types to consider. Some of the most popular ones include:
- Stocks
- Bonds
- Funds
- Real estate
- Cryptocurrencies
This list is by no means exhaustive, so do your research to discover how risky each one is and what your potential returns could be. This should help you decide where your money is best placed.
As you can see, becoming more savvy with your finances isn’t rocket science. Take time to develop your knowledge and it should help you steer clear of any financial worries.
