(opinion article)

As you know, for the life of any person, material resources are required, that is, money. The usual source of these resources is work. But why do some people live in poverty, while others go on vacation several times a year and live happily ever after? The Secret is in Financial Literacy…What is Financial Literacy? This is the ability to competently manage available money. In this article, you will receive some simple tips to help you understand the basic principles of this skill and not make mistakes that sometimes ruin human destinies.

The first thing to decide is what you want from life and what results from you expect in the future. Obviously, you cannot become rich if you spend too much and do not save some of your income. This means that in order to live better tomorrow, you need to do something about this today. The simplest example of financial literacy is the case when every month you leave about 10% of your salary money and keep it as a reserve. These funds will make you feel more comfortable and be confident in the future, as well as save you from possible loans and other things.

You shouldn’t buy something that you cannot afford, even on credit. Very often people get into loans in order to master the object of their desire: a car, a house. This is a wrong step since after purchasing a car, your income remained unchanged, but your income decreased because now you need to pay off the loan. After a few years, the loan will be paid off, but the living conditions do not actually change, and when you sell the car, you will lose about 40% of its original cost, and if you take into account the amount that you overpaid on the loan, then the situation is quite sad.

It is worth mentioning that every year your funds lose their value. In any country, inflation is present, often it is 4%, which means that your savings of, let`s say, $ 100 at the end of the year will be $ 96. The easiest way to avoid inflation is to deposit it in a bank. This function allows you to neutralize the effects of inflation, and in some cases to make money.

As a result, we can conclude that financial literacy is an important skill that any person should possess. By following general concepts and rules, each person can improve the quality of his life and be ready for various turns of fate.