How to increase your financial literacy?

A low level of financial literacy means you don't understand money. This leads to bad decisions and various financial problems. How can you increase your knowledge and avoid unnecessary mistakes? There are several options you can try.

Good financial habits

The basis for good financial decisions are good financial habits. These should already be taught to students in primary and secondary schools. Unfortunately, in Slovakia this is often not the case. Therefore, this education is left to us or our parents.

Practical financial habits that can help you save money include:

• Limit impulse purchases - Impulse buying causes you to buy what you don't need. Always think carefully when buying any item, cheaper or more expensive. Find out whether you will actually use it and whether it will just take up unnecessary space in your home.
• Set a monthly budget - for each month, set an amount you can spend and try not to exceed it. The aim is not to be as frugal as possible, but to get an overview. Without information and discipline, you won't move forward.
• Don't get into unnecessary debt - only take out mortgages and other types of credit when you really need it (for example, to buy a home). Avoid taking out a loan to buy a new computer or Christmas presents.
• Find out what's "secretly" stealing from your budget - There may be unnecessary fees or regular payments for subscriptions you don't use.
• Save - don't buy things you don't need. Save your money and invest it.

Tip

Ministry of Finance has set up a portal for financial education Fininfo.skwhere you will find various articles oriented at saving and sound financial management.

Further opportunities to increase financial literacy

You can also increase your level of financial literacy by studying information in books and on professional portals. You may also find it helpful to various professional lectures or courses.

Although theoretical knowledge is important, it is not always enough. Everything you learn, do not forget to apply to practice. Use the individual information to create a monthly budget for your household, for shopping and, above all, for investing.

Valuation of finances by investing

Every financially literate person knows that the finances they have in their checking account or at home in a safe, lose their value due to inflation. That's why it's a good idea to invest them.

In the past, investing was only for a certain group of people. Today, some forms of it are available to all of us. Some of the most accessible investment instruments include shares or funds that you can invest in through a bank or on your own.

However, beware of the dangers and fees that are often associated with them. Don't be afraid to ask questions, and while it's always best to study the "small print" yourself, meeting with a knowledgeable professional or asking a few questions of a financial advisor will help you develop a basic understanding. That way, you'll know what to look out for and what's worth getting more information on.

In addition to these are popular andj real estate. One option is to buy an apartment and rent it out, although this form is not among the most affordable. It requires a certain amount of capital and the ability to deal with the many responsibilities and worries involved.

Another opportunity is gaining popularity in Slovakia and around the world, real estate investment crowdfunding - in Slovakia from 10 November 2023 regulated by the National Bank of Slovakia. It is particularly popular for its low cost, accessibility and easy diversification. The investor chooses the project and the amount of the investment on the basis of the information for each real estate project.

The first step is the hardest

V the first article this series, we've presented you with several options for where to find information about financial literacy. Today, we've covered a few healthy habits to help you get on the right track. It's full of new possibilities and opportunities, but with those come new pitfalls. That's why we're dedicating the next article to how to start investing and not get burned.