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Photo: Courtesy of Katia Chesnok/ Art: Stephany Reyes
Lifestyle

How to Improve Your Financial Literacy Starting Now

Katia Chesnok is a Latina money expert and coach and the founder and content creator of Economikat, a personal finance educational platform. She educates Latinx on all things money and empowers them to earn more, save more, side hustle, and start investing to build wealth.

If you have spent some time reading personal finance information, newspapers, or even watching local news you have most likely come across the term “financial literacy”. Maybe you have thought this term implies something complex that only people who work in the financial field can understand. But, financial literacy is basically the understanding of everyday financial concepts such as budgeting, investing, saving money, handling credit, managing our day-to-day finances.

Having an understanding of financial literacy is very important, yet very underestimated in general. Most schools don’t teach financial literacy when this really should be a mandatory subject for all ages and grades. This subject directly affects our lives daily and yet we aren’t taught this early enough. We all face or will face personal finance situations that will affect our future and personal goals: buying or renting a home, leasing or buying a car, applying for student loans, investing for our retirement, and more. When was the last time you used the Pythagoras theorem in real life anyway?

Being financially literate means you have a basic understanding of:

Budgeting your money
Setting financial goals
Paying bills and saving money
Basic understanding of loans
Credit scores, credit cards, and how they work
How investing works for your retirement

So while financial literacy is not usually taught in schools, it’s also not magically learned and especially among immigrants and first-generation kids who don’t have that familial access to wealth and knowledge gained through experience. We can learn it ourselves, especially now when we have access to so much information right at our fingertips. These are some things we can do today to improve our financial literacy:

Read or listen to personal finance books

There are so many options and on different financial literacy levels and subjects, books from budgeting to investing, from money mindset to general financial knowledge. If you don’t have much time to read, try listening to audiobooks on the go. Some of my favorites include Clever Girl Finance, Broke Millennial, and The Simple Path to Wealth and you can find more on my Amazon list.

Subscribe to financial newsletters

Go to trusted financial educational sources such as Investopedia, The Hustle, Yahoo Finance, CNBC, and others for free weekly educational resources. Also, if you don’t have much time this is a good way to read and learn some financial concepts in bite-size formats. You can also subscribe to my free newsletter.

Listen to financial podcasts and watch Youtube Channels

So many finance experts have podcasts and Youtube channels full of practical information and the best part is they are all FREE. Some great money podcasts include Redefining Wealth hosted by Patrice Washington, Yo Quiero Dinero hosted by Jannese Torres-Rodriguez, and The Fairer Cents hosted by Tanja Hester and Kara Perez. If you want something more visual you can check out my Youtube channel as well as Investing Latina and Miss Be Helpful.

Create a budget

A budget is a plan for your money, it’s basically how much money you have coming into your account and how much money is going out. In other words, a budget shows your income and your expenses for each month. A budget is very important, especially to have control of our finances. Remember that a budget is not a list of bills to pay, as you can and should add other personal expenses such as entertainment there as well. If we control our monthly budget, then we will control every other financial aspect.

Talk to a financial coach or professional

First, find a community online on social media related to personal finance and learn as much as you can for free. But, if you still feel like you need professional help don’t hesitate to find an accredited trustworthy financial professional. If that’s not financially an option for you, you can try booking a consultation to at least lay the foundation and ask questions to gain some general knowledge. Kara Pérez of Bravely Go offers a one-hour coaching session while Delyanne Barros aka The Money Slayer has several free resources and guides.

As per research by Fortune magazine, two-thirds of American adults can’t pass a basic financial literacy test. Also, 4 out of 5 employees live paycheck to paycheck. Moreover, as per Forbes magazine, 44 percent of Americans don’t have $400 saved for emergencies. That’s why financial literacy is so important in our lives, financial education and habits are as important as having a high income…or even more important. We can earn high amounts of money but if we don’t know how to effectively manage that money, then we might lose it all.

First, we should build financial literacy and then build wealth.