Financial literacy simply means the knowledge and skill which a person has, and which helps them to manage their financial resources properly. There are many reasons why financial literacy is important.
First, we must be able to manage what we have so that it lasts for today as well as tomorrow. Second, there are so many financial products and services being offered to us today – loans, credit cards, mortgages, different ways to invest our money. There are also many financial services companies to choose from – banks (banks give us loans and also help us to keep our money safe), stock broking companies (they help us buy and sell shares), insurance companies (they insure our cars and businesses in case of accident or loss), mortgage companies (they give us loans to buy houses). All these choices can be confusing and can cause many people to become anxious about how to manage their money right.
Here are a few things you can do to help manage your money properly:
- Make sure that you know everything about your finances. Know how much you earn, how much you are owed, how much you owe, how many shares you have and in which companies, how much you get from your investments, and so on.
- Look for a financial institution or financial advisor who knows what they are doing, who you can trust, and with whom you feel comfortable. When searching for a bank or financial advisor, feel free to ask them all that you would like to know about their products and services. Make sure you are satisfied before you decide to use them. Make sure you compare their products and services with those of other companies to see that they are not overcharging you.
- Practice good financial habits. If you pay attention to how you spend your money, you will be sure to see areas where you can improve and save more. Remember the saying “Cut your coat according to your size”
- Make sure that you are part of your company’s retirement plan. Start early to save for higher education for your children. Give your bank a standing instruction to pay a specified amount of money into your savings account at certain times; this will help you accumulate funds.
- Make sure you develop a financial plan for yourself. Your plan should contain your goals, the resources you have and steps through which you can achieve those goals. Your plan does not need to be complicated – it should be simple enough to get you to start taking the right actions.
- Make a conscious effort to look for information on financial planning and investing. Start today – the benefits will last a lifetime.
This has been courtesy Union Bank as part of The Bankers Committee Financial Literacy Public Enlightenment Programme brought to you by The Bankers Committee, comprising all the commercial Banks in Nigeria and the Central Bank of Nigeria, CBN.