Success as we know does not come by accident. In order for you to become successful in any area or field, you have to be knowledgeable in that area or field. Same can be said for “financial independence.” Financial independence can be achieved when you are first, financially literate. Most generation “Zers” (Gen Zers) erroneously believe they will become financially independent when they start working hard and earning enough money.
How possible is it to become a medical doctor without successfully graduating medical school? Impossible right? Truthfully, you cannot become successful in any field without having knowledge about it.
I wonder why most young people think they will instantly become millionaires and billionaires by just earning an income with no financial literacy whatsoever. We have been made to erroneously believe that going to school and getting a good job in order to earn a good monthly income will guarantee our financial independence.
Getting the drift yet? How about you tag along as I debunk the notion that earning an income is the main key to financial independence.
What then Is Financial Literacy?
Financial literacy is the understanding of concepts including saving, investing and debt that leads to financial well-being and stability – Investopedia. Financial literacy includes budgeting, investing, insurance, loans and interests.
Most Gen Zers think that financial literacy is of no importance to them at the early stages of their lives. The truth is, without financial literacy you are going to be living pay-check to pay-check with little to save for retirement. In such a case, financial independence goes out the window.
According to Robert Kiyosaki, the author of ‘Rich Dad, Poor dad,’ a big catalyst for the middle class getting poorer and the rich getting richer is the difference between the financial literacy of the middle class and that of the upper class.
Also, according to research, 53% of U.S consumers who make between $50,000 and $100,000 annually live paycheck-to-paycheck, with 18 percent struggling to pay their bills. This proves my point i.e. earning a good income without financial literacy is not going to guarantee financial independence.
It is therefore possible to draw a direct correlation between your financial independence and your financial literacy. Thus, your financial intelligence determines how rich you will be. You want more money? Increase your financial intelligence.
Why the Fuss about Financial Literacy?
Financial literacy is important because it helps individuals understand financial concepts that will help them manage their money better. It also helps them become financially independent and self-sufficient in the long run.
Financial literacy is a life skill that one must grasp for good financial wellbeing.
I know you sometimes wonder why celebrities like Michael Jackson, Mike Tyson, Dionne Warwick who had a lots of money became bankrupt after sometime or why an individual after winning a lottery squanders all the money within a short period. It is simply because they were not financially literate.
Ways to become financially literate
- Read books on financial literacy. In your quest to become financially literate, reading is crucial. I suggest you start with Robert Kiyosaki’s ‘Rich Dad, Poor Dad.’
- Listen to podcasts on finance. Due to your busy schedule you may not be able to make time to read. This is why podcasts are perfect. You can listen to finance podcasts on your way to or from work, while doing your chores etc. An example is the ‘So Money podcast.’
- Attend financial literacy seminars.
- Take financial literacy courses. Besides books and podcasts, you can get involved in a financial literacy class or course either online or in person. Choose what best suits you.
In conclusion, if you are not financially literate, you can explore the avenues stated above. They will aid you on your journey to financial independence.