Money & Adulting: Becoming Financially Literate in the Digital Age
Do you struggle to get your finances together?
We’ve all been there.
What is Financial Literacy?
Financial literacy is a tough concept to grasp - unless you have a background in it. But it is undeniably important. When your finances aren’t in order, life can get pretty messy pretty fast - not to mention the stress.
Financial literacy refers to your ability to understand and apply financial skills, like budgeting and investing. Yet, it’s something that isn’t exactly taught in school. As an adult, you are thrown into a world where you all of a sudden have to manage bills, mortgage or rent payments, and more.
And sometimes, it turns into a juggling act, where you’re simply trying to keep your head above water and avoid drowning in debt.
Did You Know?
Surprisingly, about 78% of workers live paycheque to paycheque. Further, the average American also has about $38 000 dollars in debt.
Ultimately, this can create a vicious cycle where you are barely making the interest payments on your debts, saving zero money, and starting at square one again each month. The good news? A little bit more planning can go a long way.
What Does it Mean to Be Financially Literate?
While we have somewhat defined this term, there is more to it.
- Setting Financial Goals
- Paying Bills and Saving Money
- Credit Cards, including your credit score
Now, about a year ago, this would have gone straight over my head, so don’t freak out if your eyeballs are turning into the back of your head. Put on your thinking gap! It’s time to learn (and even though it’s not the most exciting topic for most, it is so so worth it).
So, how can you become financially literate?
Well, it’s a bit hard to roll this one all into one article, so we’ve got some tips to get you started. And remember, becoming financially literate is up to you. Unfortunately, our educational systems don’t really touch on this one. Thus, your finances and learning about them is entirely your responsibility. You’ve got this!
TIP #1: READ READ READ
Seriously. Reading about it - however boring you may think it is - will get you places. It will help you set proper budgets, stick to them, and maybe even start to see your debts going down and your savings going up.
But you need to know how to set a budget and stick to it. Reading will get you there. If you are a small business owner, I highly recommend reading ‘Profit First,’ it will change your financial world. Even if you aren’t a business owner, this book might help you set up your personal financing in a way that makes sense.
TIP #2: Take Advantage of Financial Management Tools
It really doesn’t have to be hard! Those barriers in your mind are merely mental blocks. Chop ‘em down! Financial management tools can make this process much easier.
It will be a learning curve (like everything else finance-related) but your future self will thank you. This whole process will lead to less stress, less financial panic, and potentially fewer breakdowns or moments where your card gets declined (yes, we’ve also all been there).
There are apps for that!
Download a financial management tool. Find one that works for you. Personally, I use Pocketsmith which downloads every transaction I ever make into its application. This way I can categorize everything and check to ensure I’m staying on my budgets.
For some, Pocketsmith might be overkill (although, I really can’t recommend it enough). If Pocketsmith proves to be intimidating, try BudgetSimple or Mint. These are very similar to Pocketsmith, but they may be easier for you to use.
TIP #3: Download a Few Financial Podcasts and Listen to Them!
For your next workout, listen to a financial podcast. Or put it on when you’re cooking - whatever works. There are so many great money podcasts out there too, like ChooseFi or BiggerPockets Money Show.
Learning is really essential here. You aren’t going to get far without listening and learning. If you are serious about finally getting your finances under control, you will need to dedicate some time and brain energy toward it. For real.
TIP #4: Use Spreadsheets
Even when you are using an app to help with budgeting or moving money around, sometimes a good ol’ spreadsheet can help lay it all out for you. Or perhaps you find the app overcomplicated - use a spreadsheet!
You can also get ultra-organized here and shade different headings different colors because hey, why not make this financial stuff a little more fun?
TIP #5: Quit Consuming
Consumerism has taken over society. We buy and buy and buy. We might not need any of it, but we want it oh-so-badly.
Cut it out. Get your head out of this mentality. You can’t be aimlessly spending when you’ve got budgets to stick to and debts to pay. It doesn’t mean you can’t spend on anything. It simply means you have to plan. Is it in your budget? Yes, go for it. No, hold off and think about if you even really need it. If you do, plan for it in the future.
It sounds simple (and it really is). But we get so caught up in buying the latest phone, gadget, clothing trend, or shoes that we forget. We think our debts will magically solve themselves. They won’t. You need to make a plan, stick to it, and only spend within your budgets.
Related Article: How to Make a Minimalist Lifestyle Work for You
TIP #6: Plan 2 Days a Month to Go Over Your Finances
Put them in the calendar. By planning two days a month, such as the 15th and the last day of the month, you stay on top of things. Your finances never stray far off from your goals, because you are in the know. You can see when you might be overspent, which means you’ve got to cool it for the next few weeks or month.
You can make informed decisions about spending this way - rather than spending aimlessly with no budget.
Get Your Finances Under Control!
You can do this. It isn’t rocket science, so tear down those mental blocks, dedicate a few hours to getting organized, then set your two days per month to stay on top of it all. Once you get financially organized, you become more financially free. And let’s be honest, we all kind of want that.