Smart ways to improve your financial literacy

There are various smart ways to improve your financial literacy to ensure you know how to get the most value out of your banking, are a savvy saver, reduce debt, increase your credit score, understand basic investment principles and use your money to get the greatest tax benefits possible.

Many consumers need financial literacy education. The effects of poor financial literacy can be devastating for your financial future, right through to retirement, where it is estimated that only six out of every 100 individuals will be able to retire comfortably.

According to debt counsellor DebtBusters, South Africans spend nearly two-thirds (63%) of their take-home pay simply paying off debt every month. That does not leave much to pay for food, groceries and transport, let alone save for retirement or deal with life’s unexpected little emergencies.

“Financial literacy affects every aspect of our lives, from education to where we live and how we access medical care. The less debt we have, the less stressed and therefore the heathier we are. Even just taking a few minutes every day to educate ourselves about financial matters is an investment in our future,” says Stian de Witt CFP, executive head of financial planning at NMG Benefits.

He says there are these four ways to improve your financial literacy:

App based solutions

One solution to the problem of low financial literacy lies in app-based financial learning experiences, says De Witt. These apps give their users the knowledge to understand financial matters through easy to grasp, story-driven educational content delivered to their mobile phones wherever they are.

NMG’s own offering to employers is SmartAlec, powered by global financial education fintech FinEazy. The app teaches users a range of financial principles, from the basics like banking, types of bank accounts, payments and savings to sophisticated investment portfolios. It also provides guidance on short and long term insurance.

“If you do not have access to an app through your employer, there are numerous free online resources that will help you to start making better financial decisions. Good financial literacy is the foundation for a better life for you and your family.”

ALSO READ: PODCAST: Are South Africa’s youth financially literate?

Assess your financial situation

Review your income, expenses, debts and overall financial health. It is important to have a clear understanding of the extent of the problem and exactly which factors are contributing to your financial stress.

Manage your debt effectively

To overcome your debt problems, look at your outstanding balances strategically. This could involve negotiating with creditors to reduce interest rates, exploring options for consolidation or refinancing and establishing a repayment plan that aligns with your financial capabilities. You could either focus on high-interest debts first or use the snowball method to gain momentum by paying off your smaller debts first.

Get professional support and guidance

Speak to a financial advisor who can give you expert guidance tailored to your specific situation. Financial advisors have the resources, experience and tools to support you in your journey towards financial freedom.