Three Ways to Improve Your Financial Smarts Without Using an Advisor
Understanding money can appear complex, but there are ways to break it down into manageable pieces so that you can become more financially savvy, without having to defer to a professional. One perk to gaining a better understanding of money and how it works is that the topic can be both general, and specific. Both perspectives are important because they hinge on each other. For example, if you want to better understand your personal finances, you must first educate yourself on the generality surrounding finances in general. Discovering what is, and more importantly what is not, applicable to you and your goals will help you streamline your quest for knowledge and eliminate the topics that do not currently need your attention.
Simplify Your Budget
Tracking expenses and determining how to allocate funds to the moveable parts of your budget can create chaos and confusion that lead to bad habits. Begin with the portions that are fixed, income, bills, and debts. Learning about the difference between good and bad debt will illustrate for you how to prioritize repaying it. Student loans are a great example of good debt, that can also be manipulated. Since these loans have large lifespans, people often settle for the terms they signed on with and make payments until they reach a zero balance. However, learning about refinance options can be the difference between a savvy budget, and a complacent one. You can refinance your existing student loans with a private lender in order to save money on your monthly expenses. Researching this option will show you how your monthly total can be changed. This will not only free up cash each month but will also alter the total you repay overall.
Learn the Jargon
The vocabulary associated with money is an essential component for learning. Getting familiar with financial jargon is going to set the foundation for your overall understanding of the industry. Online resources, and free apps, are a great way to start, and you will not need the help of a professional to access them. Once you have learned some of the basics, you can begin to determine what applies to your personal finances as well as how to implement change to increase your relationship with your own money.
Pay Attention
One of the biggest mistakes a person can make to result in decreased financial smarts, is ignorance. While it might be nice to have bills on auto pay, and live off the same budget you always have, not doing checkups on your finances is a mistake. You do not need to harp on your banking and watch every penny, but you should know the trajectory of your money and the purpose of each dollar. Understanding how to create opportunity to save more and build on good habits regarding spending is the practice of every individual who finds financial success. Paying attention also gives you a chance to identify any potential issues or even fraudulent activity that can negatively impact your wallet and be hard to recover from.
