When the government attempted to make financial education a mandatory part of the curriculum back in 2013, it was recognizing a growing lack of financial literacy throughout the UK. An estimated 50% of the UK population is considered to be financially vulnerable, for example, with those aged between 25 and 34 the most likely to incur significant debt.
The importance of this shouldn’t be underestimated; as financial literacy holds value for everyone from business and home-owners to forex traders and similar market speculators.
The question that remains, of course, is what practical steps can you take to improve your financial IQ and understanding? Here are some tips to help you on your way:
Follow 5 Steps to Improve Financial IQ for Freedom
Understand the ‘Cashflow Quadrant’
American entrepreneur and author Robert Kiyosaki is an expert in the field of finance, with his book ‘Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom’ a must-read for anyone looking to grapple with fiscal complexities.
This focuses on the so-called ‘cashflow quadrant’, which highlights four broad ways of generating income (namely employment, self-employment, business, and investing).
According to Kiyosaki, this represents a form of a ladder and one that people should aspire to climb as they strive to grow their earning potential, accumulate wealth, and ultimately unlock passive income streams.
This also creates an immersive and practical learning experience for individuals, as they pass through different stages of the quadrant and apply their knowledge accordingly.
Use Simulators
This book also highlights the inextricable links that exist between different methods of earning, so experimenting with alternative options can build a broad base of fiscal literacy.
Of course, it’s important to attempt this while minimizing risk and safeguarding capital, and one of the best examples of this is to leverage a forex demo account.
The reason for this is simple; this simulates a real-time marketplace and trading environment, in which users can hone existing strategies and learn about the complexities of the space without risking their hard-earned cash.
On a fundamental level, this also enables users to understand the underlying laws that govern change in the market, creating a sense of determinism that can prove useful in any financial circumstances.
Ask for Expert Advice
If we stick with the example of forex trading, it’s interesting to note that contemporary platforms and financial advisor boise, brokerage sites offer access to a huge array of intuitive analytical and risk management tools.
It’s certainly important to understand the broad importance of risk-management in the world of finance, as you’ll need to create built-in safety nets and contingencies that allow for the volatility that stalks financial markets and the economy as a whole.
Trading platforms (including social entities) also connect investors to expert advice and guidance, and this is another key lesson for people to follow when looking to build sustainable and lucrative sources of income.
In more general terms, talking to an experienced advisor and financial expert can help you to access actionable and easy-to-understand guidance across an array of issues. This can cover everything from managing credit and debt to accumulating wealth, with bespoke advice crucial to optimizing returns in your own unique circumstances.
Get Organized
Getting organized is an important step for a better financial life. First, set any bills you can to autopay. Missing a payment can be detrimental to your credit and your financial future, so ensure all bills are paid on time.
Also, be aware of how much money you have in all your accounts, including savings. Emergencies are a part of life, and they often happen when you least expect them. So it’s important to be prepared. Many experts recommend saving for at least six months of living expenses to ensure financial stability without depending on credit cards.
Lastly, consider getting rid of items you no longer need. Decluttering your living space can also mean money in your pocket. Hold a garage sale, sell items on eBay or Craigslist, or even donate items for a tax deduction (but don’t forget to track all items donated!).
Maximize The Profit
Whether you’re overspending or have excess income, it’s a good idea to maximize your money and reduce wasteful spending. Little things add up, and cutting them out can impact your finances in a big way.
Get rid of that gym membership you never use or the magazine subscription you forgot about. Use only in-network ATMs so you don’t get hit with fees for withdrawing your money. Make sure you claim all applicable tax credits and deductions. Shop smarter at the grocery store by making a list and buying only what you need. Find alternatives for expensive items, and compare brands to get the best price.
By trimming excess waste and spending, you’ll find you have extra money you never knew you had — money which can then be put toward your financial goals.