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Personal finance management is undoubtedly one of the most important life skills to have.
The more financially literate you are, the more power and control you have over your money.
Knowledge about how money works positively influences your spending and investment decisions. It also helps support life goals, such as saving for retirement, investing for future financial security, or running a business.
Your level of personal finance skills is a significant indicator of future success and happiness.
The Real Potential
1. You Gain Control
Knowledge, as they say, is power. The more knowledge you have about money, the more control you have over your finances. Personal finance skills empower you to make better decisions.
You’re better able to dominate your finances and make money work for you.
2. You Eliminate Expensive Debt
Debt is not bad; unmanageable debt is. There’s a tendency for people to change their lifestyle with an increase in income. Again, nothing wrong with that if you afford it.
Unfortunately, most people unknowingly change their lifestyle at a proportion way greater than their increased income. Understanding debt, credit cards, and interest rates will save you plenty of headaches.
Financially savvy people know how to use debt to their advantage.
A comprehensive understanding of debt gives you the power to use inexpensive debt to your advantage. The strategy here is to keep your interest rates a low as possible. And this includes proper management of credit cards.
Financially savvy people who understand the power of a good credit score make an effort to pay off their credit cards in full every month.
3. Gain Financial Freedom
Imagine a life where you don’t have to worry about how you’ll pay your next bills. Your time is not tied down to a specific job, and you’re truly free, free to do what you love or go where you want or spend time with whomever you want.
We all want that kind of freedom. Unfortunately, most of us think that such a lifestyle is only reserved for a selected few. This couldn’t be farther from the truth. All it takes is some personal finance skills.
It’s not about how much you make; it’s about how much you keep.
How to Gain Personal Finance Skills
1. Read Books
There are many great books that can improve your financial knowledge and inspire you to achieve financial freedom. My absolute favorite is Rich Dad Poor Dad. Here’s a list of more such books:
2. Read blogs.
The fact that you’re here, reading this article, means you’re committed to improving your finance skills. When books get a bit boring, blogs are an excellent way to get tips and tricks about personal finance. Here’s a list of great blogs.
3. Listen to Podcasts.
The best part about podcasts is that you don’t have to set aside time to listen to them. You can listen to podcasts while driving, cleaning, or while out jogging. Here’s a list of some interesting podcasts.
