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Financial literacy…

We all know this phrase, but not everyone understands what it really is.

Financial literacy is the level of knowledge in the field of finance, personal savings and ways to manage them.
Most people do not want to understand this topic because they do not consider themselves financiers or bank employees.

But the truth is that finances surround us everywhere, and it is vital to know the basic rules of their competent use.

In addition, our financial illiteracy is often used by other people, playing on our desires and desire for a better life. Which often leads to sad consequences.
Proper allocation of finances
A person who has achieved financial literacy has 3 main features:
His expenses never exceed his income
He has a financial cushion for force majeure cases (in the amount of income for 6-12 months)
Any positive difference between monthly income and expenditure is put into investments of any form
So, we understand that it is not enough to reach a certain level of income, you need to insure yourself against curious situations. Everyone repeats the phrase: “there is no extra money”, spending huge sums a month on absolutely unnecessary things, the purchase of which is burdensome. Instead of investing them and increasing your income, in order to buy something really necessary, but costly. And so all large-scale goals and dreams are postponed in a “long box”.

It seems paradoxical that it really doesn’t matter how much you earn at the moment. After all, there are thousands of examples of people who have become millionaires from beggars. And there are many times more stories about how people lost the wealth that fell on them in a short time.

If you are sure that a millionaire can be financially illiterate– you are mistaken. For example, Hollywood actors who receive several million dollars for a role. After some time, their fame passes, and they recklessly disposed of finances that disappeared along with fame. Therefore, they play low-grade roles for the rest of their lives and sell off property to make ends meet.

That is why it is important to study theory, cultivate a conscious attitude to money and develop financial thinking.

This is the first of the points in the knowledge of the basics of financial literacy.

Here are a few more of the main points:
Keep records and carefully plan your finances
Master the basics of cooperation with financial institutions (you need to be able to establish relationships with all financial market participants)
Pay off your debts and give up consumer loans altogether
Understand that an active way of generating income will not last forever
Multiply your funds by investing
Sources of passive income
It is important to understand that what you are learning needs to be put into practice. After all, what you do today will affect your immediate future. When you stop buying unnecessary things, you have new opportunities. And a new and clear thought arises – money should make new money.

And you come to plan your passive income. This should be taken seriously, because it is usually not created in a month or even a year.

First you need to decide when exactly you will need additional income – in three, five or ten years. Determine how much money you need, how long and how often you want to receive payments: once a month for the rest of your life, periodically — for example, once every five years, or according to some other schedule.

Think about how you can save — a little from each salary, once a year from the bonus, or just once when you receive an inheritance. Deadlines and amounts, of course, must be realistic. Having decided on the plans, you can choose the most suitable tools.

For several decades, the most profitable and therefore the most common is such a type of additional income as investments in securities. After studying all the necessary information, thanks to this type of investment, you can reach an income exceeding your active income.

Such a course of events cannot fail to attract, but it is necessary to carefully approach the choice of consultants and brokers to start, since the level of fraud in this environment has increased due to the demand. Therefore, it is important to have a high level of financial literacy in modern times. To take a responsible approach, both to choosing a source of passive income, and to choosing who you trust with your money.

Conclusion
The key skills for developing financial literacy are discipline and the desire to delve into the topic. More than 90% of humanity spends money completely thoughtlessly and that is why they cannot become wealthy. If you are already reading this article, you have the potential to get into the very 10% of the population who understand that, having made efforts now, with age they can safely leave work and feel good living on passive income, which they have established since their youth.