Financial literacy is an underrated superpower.
There’s nothing more important than keeping track of your expenses and staying on top of your financial inflows and outflows.
Because let’s face it: being knee-high in debt and ignoring your taxes is just asking for disaster.
Wherever you are in your journey towards financial freedom, here are some things you could do to take your financial skills to the next level.
1) Build Your Emergency Fund
An emergency fund is money set aside to cover any unexpected expense that may arise. It is typically ballparked at around three to six times your monthly salary.
By padding your emergency fund, not only do you participate in a financially sound practice but you also improve your peace of mind. You also get to protect your savings by setting aside two different funds – one for medical emergencies and one for purchasing a new home.
Allocating a portion of your monthly earnings is necessary, especially if you or your dependent is prone to chronic health conditions.
Here are some steps to get you started in building your emergency fund:
- Create a budget and stick to it
- Set an amount as your monthly saving goal
- Adjust your budget as your income changes
Building your emergency fund promotes discipline and ensures you don’t fall short financially for any of life’s expensive curveballs.
2) Discipline Your Spending Habits
That dazzling new watch or that discounted dress may look tempting at first sight, sure.
But add up all the times you’ve fallen for that line of thought, and you get to see how easy it is for us to throw money excessively.
By practicing delayed gratification, you get to save yourself to enjoy much grander things down the line.
By skipping eating out in a restaurant, your future self would thank you for the funds you’ve allocated to that dream vacation abroad that you’ve always wanted.
Or by skipping the short-term vacation, you get to fund the startup you’ve always wanted to venture into closer than you’d ever thought was possible.
The goal you want in the future, no question about it, is always up to you to decide.
But in the internal battle between choosing an immediate reward today versus reaping better rewards tomorrow, the latter would open up doors that will leave a long-lasting feeling of fulfillment in the end.
3) Devour Financial Resources
Another great way to step up your financial skills is by scouring for resources or mentors online to help direct you towards success. Acquiring skills and knowledge to enhance your financial literacy is simple with resources online, like Monarch.
Continuous learning from these resources grants you a fresh perspective and piece of knowledge you can use in your daily life.
There are countless numbers of books, courses, videos, blogs, and podcasts available online to guide you on your journey towards financial stability.
These resources give you concrete examples on how to apply principles, as well as theories that articulate sound financial practices that you can apply today.
And the best part is: many of these resources online are comprehensive and stick by you at every step of the way.
Whether you need a resource for tax management, paraplanning, budgeting, or just looking to upskill, you have no shortage of both free and premium resources on the internet.
By doing so, you get to understand and implement your learnings to your waking life, which brings you one step closer to achieving your financial goals and dreams.
4) Wipe Out Your Debt
What’s the number one thing you should avoid accumulating as much as possible? Cavities. The number two thing? Debt.
One of our most expensive mistakes is carrying debt and having no solid plan to go against it.
The stress of having a large sum of debt is no joke. It can lead to mild to severe health problems like anxiety, migraines, and heart attacks.
While making ends meet is never easy, if you can afford to go for a dinner out or buy a new dress should consider paying off your bills and payables first.
Paying off debt can keep you in a clean state — physical, mental, and financial – which can be an enormous blessing in the long run.
It also grants you the financial freedom to pursue things without always having an eye out on the debt repayment date.
So if you want to take your financial skill to the next level, create a plan of action to minimize debt accumulation, especially high-interest debts, as much as possible.
Here are a couple of ways to do it:
- Asking the issuer for a lower rate
- Consolidating multiple debts into one debt
- Transferring high-interest debts into low-interest credit cards
By sacrificing a little bit of leisure and lowering your debt, life will feel a lot less constricting in the long run.
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