With the speed of information these days it can be a little overwhelming to understand the intricacies of your superannuation, pension, mortgage and insurance etc. Most of us prefer to let the experts handle our choices and we assume they have our best interests at heart.
It’s never been more important to know your personal finances because in the end you’re the one that benefits from knowing when to change banks or mortgages for better deals and savings. I banked with the same (top 4) bank for over fifteen years. I also had a share trading account with them. I thought at the time it was more convenient to keep everything in the same basket until I asked them for a home loan. I was forty two years old at the time. You can’t imagine my disbelief when I was told they could only give me a twenty three year loan instead of the more traditional thirty year loan.
I contacted the bank and asked them for an explanation. I was told that because I would retire at sixty five they could only give me a twenty three year loan. Despite the fact I was discriminated against because of my age and the fact that I had a rather large sum of money they were quite happy to hold on to regardless of the fact I apparently had one foot in the grave. I immediately closed down all my accounts and moved to the bank that eventually gave me a thirty year loan. I learned a good lesson from that which kept me learning about finance.
To build your financial literacy you must first change your thinking about money. If you are in a lot of debt then it would be safe to say you need a slight adjustment. There are literally a tonne of books out there that can help in this department. Start with just one, that’s all you need. Then as your interest grows branch out to podcasts, videos and kindles.
You need to understand your superannuation from any age. If you’re young don’t assume you have plenty of time for this. The sooner you understand exactly how much you need in retirement then you only need to make small adjustments now. If you’re quickly approaching retirement you need a plan B. You need to start educating yourself on investing.
One way to increase your financial literacy is to keep notes of what you spend and decipher the difference between needs and wants. The same can be said about understanding your insurance. Do you know what you’re insured for? Every year most insurance companies increase the amount you are insured for, yet most household items decrease in value. Keep an eye on that so that you don’t over-insure.
Make finance a topic of conversation around the house, including the children. The more exposure to real life day to day living the children have the better they understand the value of money.
Read, read, read.