Kan Dail
Financial literacy is all about understanding how money works and using this knowledge to improve your situation. In other words, it’s supposed to be practical, actionable knowledge.
So, on our list, we’ll include tips you can introduce as soon as possible (some of them as early as today) and those that will give you a relatively quick payoff. With that in mind, here are the top ten tips you need to hear.
1. Tech-savvy budgeting
Budgeting is much easier when you start using an app for this task. There are so many fantastic budgeting apps you can download, connect to your cards and digital wallet, and let them do their work in the background.
Through the help of OCR (optical character recognition), AI technology, IoT, and machine learning, you can scan QR codes or even use these apps to “read” your store receipts. In other words, data entry becomes automatic, and, for the first time in history, you can track your spending without making an effort.
In other words, there’s no excuse for not budgeting in 2024.
2. Dipping into the gig economy
When you need money, you don’t have to find a part-time job, which is a relatively significant commitment. Instead, you can go to sites that offer gigs. You can complete These relatively short-term tasks for a momentary boost to your budget.
Remember that you can use these gigs to finance a luxury that doesn’t necessarily fit your budget. The problem with part-time jobs is that they impact your free time and life-work balance, and you can’t get an indefinite amount of them. Even worse, they distract and tire you, which sets you back when advancing in your main day job (your career).
The gig economy is more straightforward and less of a commitment (even if it’s not as lucrative).
3. Creating passive streams of revenue
In the previous section, we discussed increasing your income without overextending yourself and taking on too many jobs. The best way to get there is to create passive revenue streams. This means buying assets that will make you money while you sleep.
What are passive streams of revenue? Well, you have things like:
- Rental properties
- Stocks that pay dividends
- The money you lend on P2P platforms
There are many other examples, but the bottom line is that you’re not leaving your money dormant. Robert Kiyosaki says that poor people work for money, while rich people have money working for them.
4. Learning how to do financial research
Sooner or later, you’ll get an idea to invest. This is a sound financial decision only in one scenario – where you understand the asset you’re investing in. So, you need to learn how to do financial research.
First, you need a reliable source of information. You want whitepapers and expert analysis but also a constant feed of information. This is why you should look for specialized blogs and platforms. For instance, if you aim to invest in crypto, you can track Technopedia analysis and reviews to stay in the loop.
Remember, investment research is not one-and-done. If you want to buy company stocks, it’s not just about studying their historical performance. It’s also about tracking their current progress.
5. Buying online courses
Perhaps the most important thing on our whole list is to acknowledge that learning is universally available today. You have so many professional courses about selling, investing, and budgeting. Why not take advantage of this?
People who are interested in self-improvement often are better off creating a small self-improvement budget on a monthly or quarterly basis. This is incredibly helpful because it puts them in a position to acquire actionable knowledge from actual experts in the field.
Remember that knowing how to handle your finances is scalable and should be treated as such.
6. Understanding how risk management works
Different types of investments have different risk levels. For instance, you know exactly what you’re getting when buying a home. While your mortgage terms may slightly change over time, the deviation shouldn’t be that big, and you’re paying for something well-established in the market.
On the other hand, when buying a volatile asset, you risk losing it all. It’s unlikely that an S&P 500 investment will drop by 90%. In that scenario, we’re likely heading toward recession either way, so it’s bad all over. However, it’s unlikely that such a thing can happen to a startup whose stock or token you’ve just bought. The potential payoff, however, is much higher, as well.
There’s nothing inherently wrong about making a risky play; you just need to understand how big of a risk we’re discussing and not risk more than you can stand to lose.
7. Threading carefully around debt
Millionaires, billionaires, and businesses can leverage debt to optimize their money spending; however, observing them and assuming that, in your case, debt is an opportunity is not the most logical move.
You want to get out of debt as soon as possible. Getting in debt to buy a new TV (while you already have one) is not a sensible move. Getting a payday loan is sometimes the only way to survive until the paycheck, but sometimes it’s better to tighten your belt.
So, as soon as your income surpasses your expenses by a decent margin, your first financial objective should probably be to cover the credit card debt with the highest APR. Then, you should eliminate your debt one by one.
8. Gamifying your saving experience
There are a lot of people saying that saving is easy. For instance, if you’re saving to buy a TV, you should just imagine taking it on a credit card and setting aside what you usually pay as a credit installment. In practice, it doesn’t work that way.
This is why you may want to gamify your saving experience. This is where all the methods stem from, like the 52-week saving plan and similar gimmicks. This may seem silly to you, but it could help you set up a decent emergency fund in a year or two. So, it is not to be underestimated.
9. Diversifying your resources
You shouldn’t commit all your money to a single asset or asset type when investing. Sure, buying a home in one city and then buying the following property in another state sounds like a good plan; however, what if the entire real estate market collapses? It’s not like these things haven’t happened before.
You need to find asset types with low correlation. When stocks are your primary investment, you want to keep 10-15% in gold or silver. Cryptocurrencies are also an excellent alternative investment. Then again, some even use designer bags, art, or unique wine vintages.
10. Taking an occasional risk
While this may sound controversial, you want to make investing fun. This is why you should take an occasional risk. This is like a more elegant way of playing a lottery – the chances of winning are small, but hope is an innate human trait you want to use to your benefit.
Remember that as long as the amount of money you set for these “risky” investments (a callback to our risk management section), this idea cannot be considered reckless by any means. It is an inexpensive idea with the potential for a considerable payoff.
You could introduce some of these changes as early as today
Nothing prevents you from downloading one of the budgeting apps we’ve discussed as soon as you’re done reading. You can also plan a course you plan to take next month and start reading about cryptocurrencies by the end of the day. Each of these decisions will positively impact your finances; you just need to take action.