How to acquire financial literacy
Your financial literacy is your ability to make financially smart decisions. You are not born financially smart or stupid; your financial knowledge or ignorance has developed over a period of time. I guess you’re not ignorant, otherwise you wouldn’t be reading this. So without further ado, here are ways to acquire financial literacy.
Own experience
There is no better teacher than your own experience, but that doesn’t mean you have to move on and make all the mistakes you can make. It is rather a case of using your personal judgment based on your knowledge and the advice of others, but you will make mistakes along the way; it is part of the learning process. Question from whom you will take advice and whose advice to treat with a grain of salt.
A great way to gain financial literacy is to register on one or more online stock market platforms where you can buy and sell stocks online. All you need is a minimum amount of money to get involved. In New Zealand, sharesies.nz is one such platform, but it is by no means the only one. Other countries have similar similar stock trading platforms.
The experience of others
The easiest way to learn is from the mistakes of others. All you have to do is keep your eyes open; many people do not do this and instead follow others like sheep. This is not necessarily the best way. In fact, history has taught me that following the crowd is often the wrong way to go. A classic example is the stock market, where a stock is overvalued because so many people have jumped on the market and bought stocks in that particular company because everyone else does. Young people with no experience in the markets are prone to this mistake.
It is worth going against the crowd; this means that you are looking for profitable deals in the markets, whether it is gold, stocks, property, etc. You don’t have to experience what others are experiencing if you have the ability to judge what is a good investment and what is not.
Be prepared to listen to what the older generation has to say. Many of their opinions will be based on their own experience.
Books
Ignorance is no excuse as long as you are not financially educated, because your local library will store financial books. There are great books on finance. Some I recommend are “Rich Dad, Poor Dad” by Robert T. Kiyosaki with Sharon L. Lechter. They have several other books that are recommended for reading. How to Be Rich and Happy by Hans Jacobi, the Australian Wealth Coach, is another book I recommend. Hans has also published several other books, Underground Knowledge and Dee Stage, two of which. “Making Money Simple,” written by Australian financial adviser Noel Whitaker, is a good read. Mary Holm and Martin House are other excellent financial authors.
The Internet
There is a lot of information available online about finance and investing; A simple Google search will do this, but as you listen to your friends, you need to use your own judgment when evaluating information from certain sites and how it relates to your personal situation. Martin House and Mary Holm are reputable advisors with good websites.
newspapers
Most newspapers carry financial information and are worth reading. Cut out articles that interest you; they do a good read in about a year.