Improving Financial Literacy Is Easier Said Than Done
Why is financial literacy such common sense yet VERY difficult to practice?
Because we need to get (at least) 3 things right;
knowledge, skills and confidence to make responsible financial decisions
Let me add a 4th; motivation.
Without the motivation to act, even the best knowledge, skills and confidence are wasted!
In my experience, it’s confidence and motivation that trip people up the most.
The “soft” skills not the “hard” ones. Why save for retirement now when it’s 30 years away? Why not buy a bigger house or start the reno today while my family’s still young? A little more debt isn’t going to hurt us, right? Why bother investing when my income is so small? There are too many investments to choose from so I’ll just leave my money in the bank.
Valid points (but poor excuses).
It’s much easier to dig ourselves INTO a financial hole than out of it. Ask anyone who’s been there and they’ll tell you the initial fun was not worth the ultimate pain.
The simple act of talking about money can make a positive difference.
Sure, money is a touchy subject but we can discuss it in appropriate ways. Sharing the highs and lows of our own money stories really helps- we’ve all made our share of money mistakes! Learning how attitudes and emotions impact our behaviour towards money can shed light on why we do what we do with money (even when it doesn’t make sense). Do I spend money to cheer myself up after a bad day? Do I spend on things that matter to me (or do I even pay attention)? Do I have the right balance between spending today and investing for tomorrow? Does my upbringing affect the way I handle money?
Here’s yet another dilemma…
When it comes to personal finance, sometimes people don’t know what they don’t know.
Tough to ask for help if we don’t know we need it!?
Consider an investment in education- read, learn or tap into the many available resources out there. Just make sure the source is respected and objective.
Alternatively, Professionals can fill the knowledge/behaviour gap but WE must be ready to listen and act. For example, simple strategies to save tax can increase our wealth over time. Reducing our annual investment and debt costs (or tapping into “free” money) will do the same. Many of these actions feel painless once we start and get used to them.
Can you relate to any of these ideas?
Most people can, myself included. There’s always more to learn or do differently in the world of personal finance. But don’t mistake learning for complexity. We can all improve our finances AND still keep things simple. Strategies, like making the most of compound interest, are easy and timeless.
If you think you can take better care of your finances, please start NOW. Read, learn, think, review or enlist help. Wouldn’t it be great to stop worrying about money?
Keep your questions coming!
As mentioned in last week’s post, I’m answering all your personal finance questions this month. Please drop me a note and I’ll respond.