When we start off on our adult lives, we are often not furnished with enough information on managing our finances properly, which can cause problems later in life. At school, we are taught many different subjects, but the basic information on managing money, getting the most out of our careers and taking care of our health, tends to be missing from the curriculum. It could be argued that this is essential information we need and is in fact, much more important than learning about other subjects.
What is Financial Literacy?
Financial literacy is the ability to take care of your finances and manage these effectively for overall good financial well-being. Many people don’t have a good understanding of debt and how to work out what credit you can afford, versus what money you have coming in. This article from payday loan website Wonga talks about the general attitude to debt and what loans are usually spent on. To be financially literate, you are able to grasp the way in which money works and you can plan for the future, including investing in the right way and taking control of your spending. If you find yourself living for your wages each month, you probably aren’t as financially literate as you could be, but you can always make changes to improve this.
When it comes to financial literacy, there appears to be a concerning gender divide. A recent US National Financial Capability Study showed that women are less financially literate than their male counterparts. This isn’t just resigned to the US though, it seems to be apparent in many other countries, including New Zealand, Australia, Italy and France. Women tend to have more gaps in their employment, such as when they take time off for maternity leave and there is also still a divide when it comes to salaries. It is therefore even more important for women to be financially literate than it is for men. A lack of financial literacy can cause mental health problems in later life, which shows how important it is to be more aware.
Improve your financial literacy
There is no clear cut reason as to why women fall behind on financial literacy but there are some steps you can take to improve your financial well-being for now and the future. It doesn’t matter what age you are, you can take steps now to improve your financial literacy. If you have debt, look at ways you can pay this off quickly. Don’t keep taking out credit until you have cleared off some debt, as otherwise, it will just keep piling up and will soon become unmanageable. It is also a good idea, especially when you’re young, to earn as much money as possible and save what you can each month. Even if it is some extra work to pay debt off for a short period of time, this will play dividends in the long run. You may also want to spend some time reading up on ways to improve your finances. It is better to look at magazines, articles etc. which focus on long term options, such as investing in property, rather than short term, get rich quick schemes. If it looks too good to be true, it probably is! The better your financial literacy, the more content you will be in the long term.