7 Ways to Become Financially Literate By Yourself

This post contains affiliate links.

If you have been trying to save money or get on top of your finances, you might have come across Financially Literacy. Being financially literate is having knowledge and control over your finances. But how does someone become financially literate?

Self-made millionaires and financially independent people are not accidentally this way. They educated themselves to become Financially Literate first before making major life decisions. If you seek to become financially independent, financial Literacy is your weapon.

7 Ways to Become Financially Literate

1-Read Finance Books

Reading books is the foundation of your Financial Literacy. It will set you apart from others and give you confidence in managing your life. Listening to podcasts or reading newspapers can help to boost your knowledge, but reading books will give you concrete information to act upon in the future.

The subject of money is not taught to us well at school. It does not matter where you live; the chances are you have not been introduced well to money. Most of the information about finances has probably come from your parents. That can depend on how your parents are financially literate. Therefore, to educate yourself, you must read at least one or two books.

If you want some recommendations, check the TOP 10 books to read to teach yourself investing

2- Listen to financially educated experts

This step solidifies your knowledge. When you subscribe to Youtube channels, Blogs, podcasts and Newsletters, you immediately gain access to the latest news and hacks about saving money and investing. It immerses you into the world of finance in an entertaining way.

I highly recommend subscribing to topics you want to learn more about property investing or the stock market. It will give you more insights into the government’s new tax rules and open your eyes to investment opportunities. Listening to experts can give you more confidence and help make the subject of finance more relatable.

3- Practice self-discipline to manage your finance

Managing finances means knowing how to plan your monthly budget and assess what is essential and not essential. Managing your finances will help you to:

• Reach financial goals much faster.
• It is the best cure for reckless spending.
• Getting out of debt.
• Plan your retirement.
• Save money.

People always think that there is a big secret to becoming financially stable. The truth is it only takes a bit of self-discipline. Managing your finances always comes down to the individual. If you want to save money, stop spending it. If you want to get out of debt, start paying them and eliminate the source that got you in debt.

Self-discipline requires patience; the good thing is there are many tools and hacks you can use to manage your finances. Here are some ideas:

• Using online finance tools to budget your monthly expenses. (There are many tools online)
• Making an Excel Sheet to track your income and expenses. (My favourite!)
• Opening a new bank account just for saving. (An excellent way to save money, especially if you set up scheduled payments)
• Seeking the help of a professional financial advisor. (For those with serious debt)

You will be surprised how much change you will see just by implementing one or two of the above.

5- Learn the tax rules in your country

This one is a no-brainer. You have to know the tax rules, what is required of you to pay, and what you can claim as deductions. You should always pay your fair share of taxes – there is no dought. But if you are ignorant of some tax rules, you might be leaving money on the table.

Luckily, that is where you can seek help from your accountant if you have several assets. The best way to be financially literate in taxes is to browse your country’s taxation websites. Many of those rules are shown on government sites as they are constantly updated. Therefore, you should always check those sites since they are made for the general public.

6- Learn the difference between “Assets & Liabilities” and “Good Debt & Bad Debt.”

Simply put: Good debt and Assets are things that put money in your pocket, and Bad debt and Liabilities are things that take money out of your pocket. 

Not all debts are bad debts. You might hear many people say, ” My house is my asset, or I invested in a new car; this is not good debt, nor an investment. When you become financially literate, you will come to l realise that what many people consider as an investment or good debt, in reality, is not.

Your house is not your asset if you are paying a mortgage. However, it can become an asset if you rent a room in your house on Airbnb that can generate cash. The same thinking applies to your car, your car is not an asset if you have a car loan, and it is not a good investment because it is a fast-depreciating product (aka liability). Nothing is an asset to you until it earns you an income.

Naming things in terms of assets and liabilities will help you to see things much more transparent. It is something that you must understand completely – without ambiguity – in the finance world.

7- Seek Professional help for legal and hard decisions

You might have already realised that seeking professional help is as crucial as educating yourself. Financial Literacy will open a world of possibilities for you. Still, there will be some decisions that you need to consult a professional such as an Accountant, Lawer, Financial advisor …etc.

Do not stress too much about this step. You just need to know that every financial decision has to be made based on correct information. You will not make any choices that are uncertain of their outcomes to some degree. If you are unsure about something, it is time to seek professional help.

What will financial Literacy offer you?

There are many benefits to being financially educated:

• Gain the ability to think for yourself and make the best decision for yourself and your family. Such as buying an investment property or building a shear portfolio.
• You will never have to stress about money.
• Financial Literacy will help to spot bad and fraudulent deals. You will act legally at all times and will not get into any shady business that can set you back. It will help you choose your friends carefully and decide who you should trust with your money.
• Grow passive investments that can feed you and your family for life.
• It will completely change your consumer way of thinking and teach you to live a life below your means and not depend on others.

How to improve your financial knowledge?

Once you have understood the basics of financial Literacy, you can start to improve a specific aspect of your life, such as getting out of debt or investing in stocks, starting a company… etc.

It comes down to your goals in life. If you are looking to open your own business, you will spend more time learning to become an entrepreneur and using the tax system to your advantage. If you want to become financially independent, you will spend your time learning how to build passive incomes and automate those assets.

If building passive income is your goal, you should read Guide To Invest In ETFs – Stock Market Passive Investing.

Financial Literacy could be a lifelong learning process. You will try something and learn from your experience and then try again with a different approach. The secret is to never stop learning.

Is Financial Literacy hard?

Financial Literacy is not difficult to master; the issue is that you were not taught financial Literacy when you were at school. Therefore, it might feel different going against the crowd since many people have their own opinions on money. That is why you need to read books and listen to experts because it will build a strong foundation for you.