If you want to increase your wealth and independence, you’ll have to learn a lot about the way money works. Most people don’t have a lot of knowledge about personal finance. As a result, many Americans have little to no savings.
Why A Lack of Savings is a Problem
This is a serious social problem because it becomes increasingly necessary for taxes and government programs to intercede to help people who can’t help themselves. That’s a fair representation of reality, not a politically charged statement. No matter how you identify politically, it’s very important to improve your financial knowledge and practices, at least if you want security and opportunity as you go into the future.
Knowledge is Power – Learn from the Best
To increase your learning, turn to the greatest educational tool ever devised by man: the internet. For all its faults, the internet still makes incredible amounts of knowledge available to people regardless of income or ability.
It’s all a matter of knowing where to look and taking the time necessary to digest the information. It’s easy to see the top blogs in a variety of personal finance niches, but it’s a little harder to take the time to read and understand them. To get started, try to take a few minutes to read a couple of articles every day. As you start to wrap your head around basic personal finance concepts, it’ll get a lot easier to make good financial decisions moving forward.
Most smart financial decisions are related to debt, saving, investment, and credit. We’ll talk a little bit about each below.
Learning About Debt:
Debt is the most important thing to pay attention to if you are like most people. Most Americans have tens of thousands of dollars in consumer debt. Without getting rid of it, they’ll never be able to build wealth and opportunity. If you have a lot of debt, pay it off aggressively. Only when it’s gone can you move on to the next item.
Learning About Saving:
Savings are your way of preparing for the future. Everyone should have an emergency fund that covers the expenses of you and your family for a few months at the very least. It’s possible to save too much money, but most people don’t have this problem. If you do have more money saved than you really need, more on to…
Learning About Investments:
Investments are ways that people try to make their money grow without daily effort on their part. Money loses value through inflation, so investments are a way of preserving buying power over time. Investments come in many forms, including stocks, index funds, real estate, and other assets. Without investment, it’s almost impossible to become wealthy.
Learning About Credit:
Credit is borrowed money. People can have good credit and bad credit. Good credit usually characterizes someone who doesn’t borrow more than they can handle, and always pays it back on time. Bad credit characterizes people who borrow more money than they can afford, and who sometimes miss repayment deadlines.
Increasing your knowledge of these four personal finance areas will give you an incredible advantage moving forward in life.