Financial literacy is maintaining the knowledge, skills, and applying concepts and practices that enable individuals to make informed and effective financial decisions. Taking steps to improve your financial literacy is crucial for individuals to achieve financial well-being, plan for the future, and navigate the difficulties of the financial world. 

What areas are covered in financial literacy?

Financial literacy can cover a variety of topics and areas that help you manage your personal finances and help you make informed decisions. The key areas that are covered include:

• Budgeting: Creating and maintaining a budget helps you track your monthly income, expenses, and savings.
• Saving and Investing: Understanding the importance of saving money regularly and the different investment options available, such as stocks, bonds, mutual funds and retirement accounts.
• Debt Management: Learning the implications of taking on debt and managing loans and credit cards responsibly.
• Retirement Planning: Understanding the difference between retirement accounts (401(k), IRA, etc.) and planning for a secure financial future after retirement.
• Taxes: Knowing the basics of income taxes, deductions, credits and how to file tax returns.
• Insurance: Understanding different types of insurance (healthy, life, auto, etc.) and their importance in risk management.
• Real Estate and Mortgages: Understanding the home-buying process, mortgages and real estate investment considerations.
• Investment Risks and Diversification: Understanding the risks associated with investing and the importance of diversification in a well-balanced investment portfolio.
• Financial Goal Setting: Identifying and setting short-term and long-term financial goals and creating a plan to achieve them.
• Inflation and Interest Rates: Understanding the impact of inflation and interest rates on purchasing power and savings.
• Banking and Financial Institutions: Understanding how banks and credit unions work, managing bank accounts and using financial services effectively.
• Social Security and Government Benefits: Understanding government benefit programs, such as Social Security, and how they fit into retirement planning.

5 Steps to Improve Your Financial Literacy

Improving your financial literacy is a valuable step towards making informed financial decisions and achieving your financial goals. Here are 5 ways to improve your financial literacy:

1. Read books and educational material

There are multiple books, articles and online resources dedicated to personal finance and financial literacy. Looks for books written by reputable financial experts that cover topics like budgeting, saving, investing, and managing debt. Regularly reading these materials will expand your knowledge and understanding of financial concepts.

2. Take online courses

Many online platforms offer free or paid courses on personal finance and investing. These courses are designed to cater to different skill levels, from beginners to more advanced learners. Engaging in structured courses can provide a comprehensive understanding of various financial topics.

3. Follow financial blogs and news

At Legacy, we release a monthly blog that provides insights and updates on a variety of topics including: budgeting, debt management, taxes, and mortgages. Staying informed about the financial world will help you make better financial decisions.

4. Attend workshops and seminars

Additionally, we provide a FREE monthly webinar called Life Lessons. Our Certified Credit Union Financial Counselor leads a conversation about financial topics that are important to our members.

5. Seek advice from professionals

If you have specific financial goals or complex financial situations, consider consulting with a financial advisor. A qualified advisor can provide personalized guidance tailored to your needs, help you develop a financial plan and answer any questions you have about investing and financial management.

Having a grip on financial literacy empowers individuals to make informed decisions about money, avoiding financial pitfalls and working toward their financial goals. It also helps contribute to greater financial security, reduce financial stress, and the ability to handle unexpected financial challenges effectively. It is an essential life skill that should be cultivated and continuously improved upon throughout one’s life. 

Don’t forget to sign up for our December Life Lessons webinar New Year, New Goals, New You on Tuesday, December 17 from 12-1pm CST. Click here to reserve your FREE spot to hear inspiring stories and practical tips to make 2025 your best year yet.