Sunday, May 15, 2011, AM | Leave Comment
Is it important to have financial literacy in order to be successful and for the most part be debt free? Yes and No. No, because literacy of any kind will not take the greed out of anyone’s life. Millions of consumers will always overspend, will always buy homes 10 times more than they need, use credit cards for extensive buying.
Even if you are a finance guru and give advice to consumers in all kinds of media, there is no guarantee that you will not overspend and use credit cards ruthlessly in your own personal finances and be heavily in debt.
Yes, because circumstances may arise that you would need to know about certain concepts when investing on your own. You need to know what debt is and how best it can be used in your finances.
Many have used debt as part of their strategy in handling personal finances. They have used debt as asset and have put it to good use.
You can borrow money to start a new business or expand on an existing one. As long as you can manage it efficiently and not let debt get out of control, in the long run, your investment can give you a good return.
You do need financial literacy if you have the desire to invest online by yourself.
There are finance terms that you must have a grip on to be able to see what industry and stock to invest in.
You must be conscientious about your finances
Whether you are financially literate or not, you must be financially conscientious.
You don’t need any kind of know-how to spend less than you make. Everyone can understand that. But how many have followed this simple financial trait?
If they had, they would not have accumulated such large credit card debt. They would not have bought humongous homes that were way beyond their needs.
Be financial literate
The following are quite excellent reasons to have some literacy about your finances to be successful.
Financial burden on your shoulders
Many companies have either stopped offering traditional pension plans or have reduced these benefits by a big margin.
Instead, they offer plans for employees such as 401(k) to participate in and make investment decisions themselves.
That means you have to know about retirement plans and how best to invest in them. So increasingly the burden of making decisions rests on the consumers’ shoulders.
Need to know other sources of income besides Social Security
Long gone are the days when Social Security was seen as a major source of retirement income, if not the major source. You may be able to survive on it. It does not give you enough to enjoy life like it used to.
Continual change in economic environment
If anything changes faster in life, that’s the financial markets. You have to know about the workings of bull markets, bear markets, rising and falling interest rates.
The so-called investment gurus on CNBC or other finance related information sources will confuse the hell out of you.
They are there to fill their own financial bellies instead of helping the consumers. They are the major source of creating and following a financial path difficult.
Pick up a guide to financial literacy and learn about the intricacies of the financial world.
Many more sources for credit
On top of everything, you come across hundreds of credit card options offered online, several types of mortgages and retirement plans.
Plus, the ever-growing number of investment options further complicate financial decision-making.
Know about financial services companies
Selecting a financial services company is by itself a daunting job. You can choose among banks, credit unions, insurance and brokerage firms, credit card and mortgage companies, and financial planners. They are all trying to get your business.
Income and expenses don’t add up
Incomes have generally continued to rise so have expenses, may be more so. In such circumstances, retirement nest egg that several years ago would have seemed more than adequate, now just seems barely adequate.
In a Nutshell
You do need to have essential financial literacy, enough to be able to invest on your own. Many folks have been bitten so many times by scams that it’s about time you got yourself financially literate.