Why Being Financially-wise is Wise (Guest posting by Vincent)

 Why Being Financially-wise is Wise

Do you know the important pointers and possible risks if you’re investing for the first time? Do you even know what an income statement is? How about a balance sheet? Many people are not really financially literate. Financial knowledge is a necessary skill and can help you achieve financial security.

Lack of financial knowledge can possibly lead to bad financial decisions and you may end up paying for the reperscussions for many, many years. To avoid this, you have to equip yourself with the right financial skills and tools.

It’s not just about buying discounted goods or saving for a rainy day. It’s also knowing exactly what happens to your money.

Financial knowledge is not always taught in school. Professionals like doctors, engineers, attorneys and even teachers can be very good in their chosen fields but turn helpless when it’s finally time for them to check their bank statements.

Gaining financial knowledge is an investment. It is the first step in controlling your money, your finances and your future. Here are some basic tips on how you can become financially-wise:

Learn How to Properly Manage Your Money

It is easy to be overwhelmed by financial issues if you have absolutely no idea what these are about. But knowing why debt happens and how you can escape it, why you must start saving and why knowing the right investments to take or getting the right insurance, is crucial. 

Learning proper money management is hugely important. But you have to give it the time and attention it needs. You don’t just say that you’ll think about it when it becomes more important—like when you suddenly lose your job and you realize you don’t know the first thing to do about your finances. Start now, and start right away. Because money and money management is relevant. That is never going to change.  

Joseph Montanaro, certified financial planner at United Services Automobile Association (USAA), suggested: “manage your budget in a spreadsheet or software package, it’s critical that you keep it front and centre,” You can always create a system for paying bills that will keep your expenses on target and help you meet your financial goals.

Talk to a Financial Consultant

Financial knowledge is a concern for everyone and the solution lies in getting the right information. You don’t really have to know everything but at least exert an effort to “speak the language.”

Start with simple ways through which you can help improve your financial knowledge. For example, go over your bank statement again. Read all the details and exert an effort to know the important technical terms in that statement. Don’t limit yourself only to details that you only know. It’s best to be aware of what’s behind those digits. Ask help from those who know best. Consult professionals in the field.

Get the Right Training—and Spread It

Financial knowledge helps you adapt to changing business situations. So, if you own a business, it’s even more important that you know how to handle money—yours and the companys’. But it’s not just your problem. A company is made up of people and sometimes, being with other like-minded people can go a long way in improving your financial understanding.

For example, if you work in a family business, giving your employees the right financial training allow for growth. You never know when the next brilliant financial insight may come from your nephew or someone in your family. Financial training gives you and your family the right tools to take that business to the next level.   

Know that It Pays to Pay Extra

The minimum payment on your credit card is determined by taking a percentage of your balance and charging you that percentage each month. Since this amount is a very small percentage of your balance, it will take a long time for you to settle your bill if you keep paying the minimum. But if you know enough to pay more than the minimum so you can cut down on the interest, then you will have saved yourself money in the process.

Help yourself make informed financial decisions. If you keep that skill, then you’ll always stay on top of your game.

About the Author:

The article is prepared by Compare Hero for My Musings Malaysia. Compare Hero is Malaysia’s leading financial comparison website. Compare a broad range of financial products, from credit cards to broadband plans, with the primary vision of making Malaysians be equipped with financial knowledge to make better financial decisions.