A broad definition of financial literacy is understanding principles of finance and knowing how to manage your money efficiently. It might seem unattainable especially if your parents or school didn’t talk to you about managing your money when you were young. That’s the story for a lot of people. There is good news though! You are smart and you are never too old to learn how to make your life easier. Here are some super simple basics, if you start with these you will be well on your way to achieving financial wholeness.
It’s not always easy to think about the future. Sometimes you don’t know what you want or where you’re going, and it’s easier to pretend it doesn’t exist. But you can’t. Don’t let it get on top of you, if you learn how to use money now, your future self will thank you, no matter who they are.
Save. It’s so crucial to save as much as you can while you’re young and no, having watched a VHS tape does not mean you are old. It means start now. Start with some. Save for emergencies and then save for your future. That money could be a car, a home, or a Magellan-style trip one day.
Budget. It’s so easy to let your hard-earned money fly away when you’re not sure where it’s going. When you can see where all your money is going, it’s much easier to see where you can make better decisions. When you know better, you can do better. Just remember your main goal is to have your income be more than your expenses.
Start by calculating your income. Main jobs and side hustles (everything). Then look at your expenses. This is rent, utilities, debt payments, food, donations, subscriptions, savings, toiletries, and entertainment (everything).
When you’re finished putting your income into each category you should reach zero. That means all your money is accounted for. Warning: you will not make a perfect budget the first time around. You’ll be way off about how much you’re spending on Mexican take-out, blue jeans, or spin-class. Don’t be hard on yourself, just adjust and try again.
Here is the easiest and the hardest step: live below your means. If you can’t afford to do or have something, don’t buy it. For some people, this can be a foreign concept, but it’s essential to financial success. It might sound like constantly denying yourself, but that’s not what that means or what it feels like.
If you need further clarification on this point, nobody has said it better than this SNL sketch from 2006.
You can be financially literate. What are your goals? What do you want? Start small and grow, take control of your finances, don’t let them stress you out. Financial wholeness is in your future, you just need to take the first step.