We’re all guilty of it, but if your money management skills don’t extend past knowing what’s in your account, it may be time to consider improving your financial literacy.
Understanding your income, expenses, and budget, whilst learning a little more about the economy are all a great way to start managing your money better and making it go further.
However, becoming financially literate doesn’t have to be time-consuming, complicated or boring. A few minutes a day spent on education about simple yet effective money habits, could allow you to significantly improve your finances.
In this article, we explore some effective strategies to improve your financial literacy skills.
Let’s begin!
1) Keep a Budget
It’s something we talk about a lot, but the most effective way to improve your financial literacy and start taking control of your finances is through budgeting. Keeping a budget allows you to gain an understanding of everything that is going in and out of your bank accounts. It’s something we’re often afraid to do, because we’re afraid what it will show - but creating and sticking to a budget, when you can, is something you’ll thank yourself for.
By tracking your monthly income and expenses, you’ll have a much better understanding of where your money goes. It’s much easier said than done, especially during a cost of living crisis, but if you find yourself spending more than you earn, it’s important to find areas to control spending.
Maintaining a budget is the first step to financial stability. Not only does it help you pay bills on time, but also helps you save for life’s unexpected expenses. Keeping a budget enables you to stand on stronger financial footing for both the day-to-day and the long term.
2) Know Your Credit Score
Your credit score affects your financial life in more ways than you may think.
Your ability to buy a car or a home, rent or even get a credit card can all be affected by your credit score. Whilst at Salad Money our More Than Your Score Loans give everyone fairer access to credit, being aware of and working on your credit score is rarely a bad decision.
Typically, it’s a good idea to check your credit report at least once a year. If you find that your score isn’t where you want it to be, now is often the perfect time to improve it. One of the best things you can do is juggle your finances to pay your accounts on time every month. Additionally, try to keep your credit utilisation ratio below 30%. Not only will this be seen positively by lenders, but it will also boost your credit score as a result. It’s much easier said than done, but you’ll thank yourself in the long run.
Having a higher score means that companies will see you as a lower risk and open more doors for credit when you need it. This is why knowing your credit score is an effective method to improve your financial literacy.
However, if you’re struggling to get a handle on your credit score, Salad Money are here to offer a helping hand with our More Than Your Score loans.
3) Try Using Financial Management Tools
Financial management tools and apps are relatively new but gaining more popularity. They are such a powerful tool to improve your financial literacy. You just need to feed them basic information and automated algorithms can do most of the heavy lifting for you.
By attaching a financial management tool to your personal accounts, you can easily track your spending and keep a close eye on your finances. These financial apps are extremely helpful in saving time and keeping your finances more organised. If budgeting manually seems to daunting, an app can be a great way to overcome any hesitation in getting started.
4) Research as Much as You Can
If you’re serious about taking your financial literacy to the next level, there are so many videos, books and resources that explain complex financial concepts in simple, easy-to-understand language.
From content covering concepts like responsible budgeting to paying off debt, to advice for first-time borrowers to strategies for building wealth, your choices are near unlimited.
By consuming the right content, over time you’ll gain a more detailed understanding of your finances which empower you to make stronger financial decisions.
5) Start Putting Your Learnings into Practice
It’s important not just to learn about financial literacy, but live it. What starts as simply budgeting and working on your credit score can, over time, be used to start building a nest egg or rainy day fund.
But building your financial literacy is easier said than done, which is why it’s so important to start.
Once you have started putting changes into place, you’ll have a better understanding of where you’re at and start to see the real life results of your time.
By practising and experimenting with what you’ve learnt, you will be able to improve your financial literacy and become a greater financial asset to yourself.
Choose Salad Money for Fair and Affordable Loans
Financial literacy equips you with the knowledge you need to make sound financial decisions and can help you lead a happier, less stressful life. However, it’s not always a quick solution and should be given time.
It’s okay if you hit roadblocks or temporary setbacks on your quest towards financial literacy. This is why Salad Money exists - to offer a helping hand when you need it.
As one of the UK’s leading online lenders, Salad Money provides employees with access to finances when they need them most.
We understand that the credit score system can be unfair. That’s why we use an open-banking-based assessment to evaluate your financial history.
With our ‘More Than Your Score’ loans, we provide working people with accessible loan options, regardless of their credit scores.
We’re also authorised and regulated by the FCA, so you can rest assured that your financial information will be safe in our hands.
To learn more about our services, click here or apply for a loan now!
