Understand the language of money for financial freedom

  How  financial illiteracy can harm you

Article by Jewa Ian           

They say that if you have only one source of income then you are an inch away from poverty. I agree with this statement but I also say that if you lack financial discipline then you are a potential poor guy. Financial literacy is of great importance because money will stay where it is respected. Now how do we respect money? We respect money by saving and investing. However whoever saves, invest and on the other hand they are a spendthrift then they are working in vain. This piece of writing will cover how financial illiteracy can harm you.

The topic of money is a topic that many people do not understand. A friend of mine came to me crying that the huge money he won from a contract did not benefit him. As a wise person who understand how money behaviors, I asked him to write down on how he spent his money. To my surprise he could not account for his spendings. Now this is where people go wrong. Once you have money please budget for it. Make sure you budget for everything even the money that you will use for entertainment.

The other problem that financial illiteracy involves is the act of giving out money Anyhowly. Most people give out money for the fear of being called stingy or mean. This is wrong. If you will give out money make sure you also budget for it too. You should track every coin that you have and this will lead to financial freedom. If you do not have money for giving away please do not touch your savings no matter how sad the borrower's story is.

Talking about improving your social life. After getting your salary write down the list of things you would like to buy to improve your life. After this prioritize. Choose the ones that you importantly need and you can afford at that time without getting financial instability. Having financial literacy or discipline doesn't me you should suffer but prioritize on important wants.

Windfalling money is money that you didn't expect. Now what do you do with such money? This is the money you can use to sort out some few issues that were pending such as debts, losses and also buy some goods from your priority list. Do not overspend just because it is windfalling money that is not from your salary. No use windfalling money to support your salary pending issues.

Let's discuss loans and depts. Avoid bad loans. These a loans with heavy interests. What happens is you will repay more than you borrowed meaning that you will suffer a loss. Healthy loans are loans with moderate interest that may not affect your finances that much. To avoid this invest in saccos where loans with zero Interest are offered as long as you are a member in the saccos. Taking about debts, you need to avoid them as much as possible. Giving people money on credit should be done only to those that you know their credit worthiness.

I conclude be saying that rich people have learn how to preserve money that's why they are rich. You need to understand the difficult language of money to become rich.