Financial literacy – what’s in it for you?
“Money isn’t everything, but it ranks right up there with oxygen.” – Rita Davenport
Financial literacy is the ability to make effective financial decisions by understanding how money works. Financial literacy allows people to earn, save, invest and spend money in an effective way in order to make the most of their financial resources. While the world of accounting and financial information is often daunting for many people inexperienced in the field, becoming financially literate is one of the most important steps in taking control of your financial affairs. Some of the benefits of financial literacy are:- The ability to create realistic and effective budgets in order to reach your business goals
- The ability to understand debt, how to structure it effectively, how to minimise interest and how to keep it at a manageable level
- The ability to understand the different options of financing your business, and making an educated decision on which option will be best for you, e.g. should you raise funds via a bank loan or by issuing shares to a new investor?
- The ability to assess how to best spend your cash e.g. should you pay off debt, pay a dividend, reinvest it in new assets or hold it in an interest yielding account?
- The ability to understand the tax system and employ legitimate methods of minimising your tax expense
- The ability to take control of your own financial affairs, without the need to rely on accountants, bankers and financial advisors (and avoid their fees!)
- The ability to multiply your money by using it as a tool and making it work for you
