What to do if you are Financially Illiterate
There an article in the Punch Newspaper title “Over 70% of Nigerians are financial illiterates”. The statement was made last week by the Chairman of Bank Customers Association of Nigeria, Mr. Uju Ogubunka at the Financial Literacy Excellence Award (FiLEX), in Lagos, he noted everyone needed financial inclusion irrespective of gender, age or profession.
According to Investopedia; Financial literacy often entails the knowledge of properly making decisions pertaining to certain personal finance areas like real estate, insurance, investing, saving (especially for college), tax planning and retirement. It also involves intimate knowledge of financial concepts like compound interest, financial planning, the mechanics of a credit card, advantageous savings methods, consumer rights, time value of money, etc.
Here are the six questions to quickly determine if you are financially literate;
- Do you know to balance a cheque book? To make it simple, do you know the ins and outs of your cash flow?
- Do you have a job?
- Do you compare prices?
- Do you have a long term vision?
- Do you have a plan for the future?
- If you have a budget plan (I’m sure you do if you are reading this.), do you stick to the plan?
If you answered no to any of these questions, then chances are you are not financially stable because you do not have the proper financial knowledge.
So what is the next step? The first step is to consciously know yourself. Here are the steps from ANZ Money Minded, an award winning program by ANZ. It’s great and it’s free!
1. Know yourself.
- Recognise the link between attitudes and approaches to managing money.
- Identify and reflect upon your own attitude to money.
- Set tasks to balance your attitude to money.
2. Spend Wisely.
- Recognise the impacts of spending leaks on your financial situation.
- Prioritise your spending by applying the concept of needs and wants.
- Identify ways to reduce expenses.
- Diarise your daily spending to identify spending leaks.
3. Clarify your goal.
- Recognise the impact of not having clear financial goals.
- Define your SMART goals in relation to money.
4. Plan your spending.
- Determine what’s left over on pay day after priorities have been taken care of.
- Recognise that regular savings are equal in importance to other budget commitments.
- See the benefits of having a budget in place.
- Take steps to create a budget.
- Plan for unexpected life events.
5. Bank Smart.
- Recognise the positive impacts of using appropriate bank accounts.
- State the advantages and disadvantages of various bank account types.
- Encourage you to shop around and ask if a better deal is available.
6. Avoid Dangerous Debt.
- Recognise the impacts of not maintaining a positive credit history.
- Identify advantages and disadvantages of various types of credit providers.
7. Watch out for Credit Cards.
- Recognise the potential cost of credit cards.
- Identify techniques to effectively man
8. Plan for your future.
- Recognise the benefits of effectively managing superannuation.
- Recognise how superannuation funds work at a high-level.
- List common features and investment options of superannuation funds.
- Identify key factors to consider when selecting, switching or consolidating superannuation funds (or pension funds).
You really need to be financially prepared before starting a new business.