Financial literacy is the ability to understand personal finance, budgeting, and investing and then use that knowledge to make good financial decisions. A person’s ability to effectively save money and avoid financial setbacks relies on their financial literacy.
When you understand every aspect of your finances, you’ll be able to set short- and long-term financial goals and avoid putting a strain on your finances. A lack of financial literacy can potentially hurt you financially and put you into debt.
Financial Literacy and Your Financial Advisors
Not understanding your finances might lead to relying on others for help managing your money every month. When you work with a financial advisor or a broker, it’s helpful to have a basic understanding of what they can and cannot do with your money. Stockbrokers and investment advisors both serve as fiduciaries and therefore are required to place your interests ahead of their personal goals. However, there are cases when individuals in these professions breach their duties as fiduciary and hurt their clients financially. If this happens to you, you will have to determine the best way to resolve a dispute with your financial advisor. This will cause you a lot of aggravation that might have been avoided if you had just spent more time bettering your financial literacy.
How can being financially literate help you?
Especially in times of uncertainty, financial literacy is extremely important. Credit card debt and investment fraud are two things that people struggle with when they don’t understand their finances.
Here’s how being financially literate will help you take charge of your credit cards and investments:
Credit Cards
Credit cards and online shopping have changed the way people spend their money, and not always for the better. It is much easier to swipe or input a card and forget about the amount being charged. Financial literacy can be as simple as understanding how a checking account works, how to avoid debt, or what using a credit card really means for your credit history. Without the proper knowledge of how to pay off your credit cards, it’s easy to get into financial trouble. Understanding personal financial management will give you a better chance at avoiding extensive debt.
Investing
With all of the buzz around investing, it’s important to have an understanding of best practices so that you can make sound investment decisions. Investing always involves some level of risk, but by being financially literate you can avoid scams or schemes with investment opportunities. Take control of your own investments by taking the time to learn more about them. Don’t rely on someone else to tell you what is the best thing to do with your money.
Understanding how your credit cards are affecting your monthly budgeting or how to make investment decisions on your own are key factors in ensuring your financial stability. You don’t have to be an expert on every financial matter, but having a basic understanding will help you to save and grow your money.
If you or a loved one hired a financial advisor who appears to no longer be handling your finances correctly, you should seek help from an attorney as soon as possible.
Contact our firm today for a consultation.
Gaslowitz Frankel LLC is Georgia’s premier fiduciary litigation law firm. The firm has earned a reputation for excellence across Georgia and the Southeast in providing representation to individuals, executors, trustees, investors, shareholders, and financial institutions in complex fiduciary disputes involving wills, estates, trusts, guardianships, conservatorships, businesses, and securities.
