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Thursday, June 13, 2024

The Importance of Financial Literacy During the COVID-19 Pandemic

One of the most important skills that we need to cultivate in our day-to-day lives is learning how to manage money. As such, having good financial literacy is extremely important as it ensures that you possess the adequate knowledge required to build basic skills of money matters. Without sound financial literacy, decision-making with regard to your finances can be more difficult and your future plans may lack a solid foundation for success.

Financial literacy includes the ability to understand how money can be made as well as knowing the best ways to spend money by utilising knowledge, resources and making good financial decisions. These decisions include how you invest, how you create personal budgets and set goals, how you pay off debt and pay taxes.

How Has the Pandemic Affected Financial Literacy?

The financial impact of COVID-19 has been huge in several ways. One area where a notable change could be witnessed was in terms of financial literacy, in most places around the world. Industry experts have noted that the pandemic has actually led to a significant increase in financial literacy levels, with more individuals showing more interest in using new financial tools, as well as in learning how to better their personal money management.

The pandemic caused major financial hardships for many people. Many people lost their jobs, experienced pay cuts or simply found themselves in a position where they were unable to generate income. As such, more and more people were looking for ways on how they could save money better and also find alternate means of generating income. For most people. improving financial literacy meant bettering their financial management during pandemic – in order to get by their difficult financial situation.

Another aspect that led to improved levels of financial literacy during the pandemic was in the field of digital financial services.With the various lockdowns and restrictions that were enforced in countries during the pandemic, people found themselves unable to visit their banks or continue using their usual financial products and services. As such, they were forced to seek alternate forms of financial services – such as digital payments, online banking and so on, in order to address their day-to-day necessities.

People who had not used digital financial services were now showing interest in improving their financial literacy and adapting to the massive digital transformation that was taking place in industries across the globe. The importance of financial literacy for youth especially was extremely high, as they sought out what they could do in order to adapt to the ‘new normal’.

How Can You Improve Your Financial Literacy?

There are numerous things that you can do to improve your financial literacy. The first step is to figure out what you already know, decide on what you want to learn about and then take active steps to achieve what you want. Below are a few tips on how to get started:

Subscribe to Financial Newsletters

Taking a couple of minutes to subscribe to your favourite financial content on the internet is one of the best ways that you can improve your literacy on a regular basis and constantly stay abreast of the latest developments in the financial world. As you are notified every time you receive a newsletter, you rarely have to go out of your way to seek content – instead, you are offered useful reminders and financial updates regularly.

Listen to Financial Podcasts

Finance podcasts offer an easy, more convenient and cheaper way of tapping into vast amounts of financial knowledge shared by experts. Listening to a podcast is a great option if you have a busy lifestyle and wish to multitask – as you can listen to it whilst doing another activity, such as running on your treadmill or even driving your car.

Read Personal Finance Books

Financial books, magazines and journals provide abundant amounts of advice related to money management and also offer a great way of bringing people closer to the realities of the world. Not only are they easily accessible, you are also given a wide range of options to choose from – be it self-help books with advice on how to better your financial life, autobiographies of prominent figures who wish to share their personal experiences, or even financial guides for complete beginners.

Use Social Media

When used properly, social media can be a great tool to help educate yourself and improve knowledge on a vast range of topics. Make sure you follow good financial pages and accounts that share useful and reliable information on topics related to managing finances. This is a great tool for the youth in particular – to help improve financial awareness and education via social media channels.

Talk to a Finance Professional

If you seek some very specific advice related to your financial situation that you might not be able to find online or via other general resources, your best bet may be to consult a finance professional or advisor. A skilled financial professional can help you keep on track by providing you advice on what financial decisions you should make in order to accomplish your long-term goals.

Do Research Online

Doing your own research online is perhaps the most basic way that you can improve your financial literacy by yourself. Not only does this cost you nothing, it also can be done at your own convenience and free time; no matter where you are. Make sure to find good financial websites, blogs and other online resources that are reliable and trustworthy.

Take a Financial Literacy Class

For an effective and professional way to improve financial literacy, you may also enroll yourself in a financial literacy class. These classes range from those that teach the basics of money management to more specific aspects of finances such as investing. Financial literacy classes teach you exactly what you need to know – so make sure you check out the syllabus and course contents before you enroll, in order to find out whether the course is suitable for you.

Purchase Useful Financial Tools

There are also some useful financial tools available that are worth purchasing. From budgeting apps to expense trackers to cash flow analysis software – there are numerous tools available to help you on your journey to successful financial planning and improving your financial literacy.

Help Your Kids Learn

Studies have shown that many financial habits developed at a certain age are fixed – so it is important to educate your children on finance management as early as 3 years old. Talk to them openly about money, play games that involve money (such as Monopoly), give them an allowance and encourage them to save, and also get them involved in major purchases or finance decisions that you make for your family. Such efforts will not only help your child, they will also foster an environment where developing financial literacy is encouraged – which will in turn help you grow financially as well.

Watch Financial TV Shows

Your choice of entertainment – such as the movies and TV shows that you watch – also have a major effect on what knowledge is acquired by your mind. The next time you are deciding on what to watch, perhaps you may want to consider a film or TV show with a finance related theme – such as Mad Money or Shark Tank – that will help you build upon your financial literacy whilst enjoying your viewing experience.

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