Financial Literacy – The Key to Developing Personal Finances


Financial Literacy – The Key to Developing Personal Finances

Financially, finance is basically a field of endeavor about the study, development, and management of financial resources and securities. These resources are assets that are not produced on a daily basis, but rather serve as collateral for loans or credit. Therefore, these assets can be called as liquid assets. Financial markets actually deal with the buying and selling of financial instruments – such as stock, bonds, debentures, short sales, etc. Financial markets include financial institutions, banks, brokerages, investment firms, and individuals.

In order to become a financial manager, you should know something about how markets work, how they are influenced, how they evolve, and how much money there is in them. Also, you need to have a good understanding of the laws that govern these so that you would know how to properly manipulate them. Thus, if you want to become a financial manager, then you should know how to read financial statements, how to evaluate financial situations, and how to interpret charts, tables, graphs, and so on.

The primary qualifications that a financial planner must have are the following: he or she should hold a degree from an accredited university; he or she should have relevant experience in finance or accounting; he or she should have the necessary background and educational requirement that would qualify him or her to become a licensed financial planner; he or she should be a member of the Institute of Chartered Accountants of India (ICAI). Besides, financial planners may also choose to get a certificate from the American Institute of Certified Public Accountants (AICPA) also known as the AICPA Foundation. All these qualifications would ensure that your financial planning efforts are well targeted.

It is very important for you to get the services of a financial planner who has proper knowledge about finances. A good planner will always have sound scientific basis when making financial decisions. For instance, he or she will use long term investment trends, national income projections, inflation, current interest rates and other relevant facts to come up with sound financial plans. If your financial health is at stake then it is very important for you to get services from someone who knows how to protect and promote it. For instance, if you are considering a long term career in finance, you should get the services of a certified planner who has ample knowledge about finance wellness.

On the other hand, even if you are just starting off with your personal finance career, you should take up the study of good financial literacy. Good financial literacy involves not only understanding your own personal finances but also about the intricacies of the entire financial domain. Moreover, good financial literacy also encompasses being able to understand and interpret the various indicators that measure the health of your finances including your credit ratings, debt to income ratio, balance sheet, liquidity ratio, and many more. You can learn all these basics by enrolling into a good financial education program that you can either take up in your neighborhood campus or through online courses.

Lastly, it is also very important for you to develop your own financial strengths and weaknesses as early as possible. This will give you ample time to work on improving your personal finance literacy and develop the right mindset towards managing finances. A lot of good and reputable colleges nowadays offer financial education programs and you can find them quite easily. Also, if you are too busy working or completing your professional education and still have a small business to run, you can always opt for weekend classes offered by local finance institutes. This way, you will be able to develop and strengthen your personal finance literacy as well as develop your entrepreneurial skills.