What IS REALLY Financial Literacy? If we’re academically literate, it generally does not indicate we are financially literate. Actually, we could be the smartest, and score many As in our exams subjects but nonetheless do not know how to arrange for our financial life. University graduates are still engaging in money problems due to insufficient financial literacy.
While academic email address details are important, it is the beginning of our life. A degree opens the first door to our career and the rest of our lives depends upon how we take care of it. Whenever we begin to work, get married, buy a residence, and have children, handling money becomes an everyday affair. How well do we score when there is a financial literacy exam? More often than not, we jump right into investment thinking that it is the most crucial aspect of financial planning. This is the direct opposite of might know about do.
Going right into investment without learning the other areas of financial literacy is like building a house without any foundation. What is financial literacy really? Recently, there is a written report on the Straits Times that Singapore posts largest decline in financial literacy across Asia Pacific. That is an annual survey conducted by MasterCard. In the whole Asia Pacific region, Taiwan arrived first while Singapore ranked 6th, behind Malaysia which came in fifth.
Basic money management consists of budgeting, saving, and using debts sensibly. This is the basic of financial literacy. For the above 3 questions, what we should can first of all do is, budget our money well and make sure we do not spend more than we earn. Secondly, do not undertake too much debts even for casing purposes. A general guideline is never to have total debts of more than 60% of our monthly salary and not more than 30% of our monthly salary for housing. This is actually the current MAS rule on personal debt also.
1800 for your total debt. Thirdly, have a crisis fund saved up for rainy days. You should ideally have more than six months of your monthly expenses stored within an emergency account. This will tide you through in the event you lose your task. Although financial planning can be carried out through a financial advisor, it is best that we understand it ourselves too.
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Financial planning is planning for our long-term financial needs such as pension. This requires the knowledge of various financial planning products such as insurance and investment products. We can use these tools to fulfill our long-term financial needs. In financial planning, protection always first comes. Insurance is an important element in our lives with the rising cost of living and medical bills especially.
We should comprehend how medical care insurance works and know which one to get, which is best for ourselves. We have to learn how to insure ourselves in the event of loss of life or even disability. Do you know that you can get the same insurance plan at 10 times cheaper? Do you know that you can get insurance coverage to replace some of your income in case of disability? There are various insurance products out there on the market but remember that the goal of insurance is actually JUST for insurance.