Finances surround us everywhere, and it is vital to know the basic rules of their competent use. No matter who one is, there is a set of general rules that have to be applied for proper financial literacy to be of any use in daily life and operations with financial instruments.
The Golden Rules of Financial Planning
1. Personal Budget Planning
Planning your personal expenses is one of the founding pillars of financial literacy. With proper control of income and expenses, you can always save more while incurring your regular expenses. Most people spend 20-30% of their income on spontaneous purchases that result in excessive expenditure at the end of the month. You must ensure that expenses should never exceed incomes, and each family must have an emergency reserve fund.
2. Read the Terms of Agreement
Recent studies show that people are increasingly turning to the use of digital funds, however, not everyone is fully aware of their use. It is important to read the terms and conditions for their annual service fees, SMS notification, fees for money transfer, cash withdrawals, cashbacks and more.
3. Maintaining a Good Credit History
Financial products like credit cards are a useful and convenient tool for making necessary purchases. But it is important to remember that a successful use of credit cards means maintaining a good credit history by paying bills on time.
4. Borrowing is Never a Steady Solution
Borrowing is often considered to be the best option for solving problems. The key point when borrowing is to choose the best type of loan for a particular situation and compare interest rates from several banks before making a final decision.
5. Identify Investment Opportunities
Identifying investment opportunities is the one the best ways to generate additional income. But it is also important to remember a few elementary rules, such as the fact that investment companies are also looking for the best possible terms for making profits. Hence, you must examine the history and reputation of the company, as well as the list of instruments it offers for portfolio options.
6. Beware of Fraud & Scams
It is very important to remember that scams often attract people with their exuberant returns on investments. We must know that financial pyramids have existed since time immemorial, the only thing that changes are their form. Every day many fraudsters come up with more and more sophisticated ways of siphoning money from people and tarnishing the reputations of honest projects.
Busting the Myths About Digital Currency
#1 Cryptocurrency Doesn’t Have Any Real Money Value
Cryptocurrency is often considered to have no real money value as there’s no material asset backing it. However, those who trade in cryptocurrencies believe in its inherent value, supporting the system since the year 2008. Fiat & Bitcoin are two cryptocurrencies not backed by any store or asset value. But Bitcoin’s value comes from technology that it is built upon while Fiat money is a government issued currency.
#2 Cryptocurrency is a Scam
The poor image created by scams has extended onto honest projects seeking to improve the financial literacy of their communities. The veil of being branded a scam has even extended to the CryptoUnit project, which instantly evokes the idea of a “CryptoUnit scam” theory.
However, the CryptoUnit is simply an educational endeavour with a large following around the world. The first reason why “CryptoUnit scam” cannot yield any hits in search engines is because the project has existed for years and has a large following in many countries around the world.
#3 Cryptocurrencies are Not Accepted as a Form of Payment
Cryptocurrencies evolved in the year 2008 and then steadily their virtue was realized by investors. Many biggies like Microsoft, Expedia, Fiverr, and Dell have started accepting Bitcoin as a form of payment for their products and services. However, buying cryptocurrency is not illegal in India but is not recognized as a legal tender in India.
Having financial literacy is the key to identifying the best approaches to managing one’s finances and discovering opportunities for improving financial standing.