Financial literacy is the ability of a person to manage their finances, not the other way around.
Nurlan Beishev, a financial expert, argues that unlike ordinary illiteracy, which disappears after learning to read and write, financial illiteracy can only be overcome through mastering personal finance management.
Beishev emphasizes that the foundation of financial literacy is the reasonable management of available resources, regardless of their size. To achieve this, it is important to acquire the relevant knowledge. There are many educational materials and methods available on this topic online,” he adds.
Financial Goals – The Key to Success
Applying knowledge of financial literacy in everyday life is the foundation of success.
“Many people struggle to save money. However, this can be turned into a habit. It is important to set aside a certain portion of any income, which will become an investment in the future. The main thing is to have a clear plan and goal. If a person understands why they need to save, the other issues will resolve themselves,” the expert asserts.
For example, if a person earns 50,000 soms a month, they should set aside part of that amount. It doesn’t matter how much – the main thing is to follow this principle.
The expert recommends starting to teach children financial literacy from the age of 10.
“From an early age, a child should be explained where money comes from and where it goes. If there isn’t enough money, it should be said: ‘There isn’t enough, we need to save.’ Some parents mistakenly believe that it’s better to keep their child away from financial issues. But that’s not true. A child should understand these things from childhood.
From the age of 10, children should be given money for pocket expenses and taught how to manage it properly. Simply discussing money without practice is like teaching to play a musical instrument without the instrument. Therefore, it is important for the child to have their own pocket money, budget, income, and expenses,” he says.
Recording income and expenses helps control finances.
Fixed expenses include: rent, mortgage, loans, utility bills.
Variable expenses include: food, clothing, entertainment, leisure, household goods, and personal care.
By analyzing your finances after three months, you can see how much has been spent and on what, and determine which expenses can be eliminated. Although this may be difficult, such an approach will help reduce costs.
The 50–30–20 Rule
An effective method of managing finances is the 50–30–20 rule. 50% of income should be allocated for essential expenses, 30% for variable expenses, and the remaining 20% for savings and investments.
Think Before You Buy
Impulse purchases often arise under the influence of advertising, surroundings, and mood.
To avoid this, you can use several methods:
If you are unsure about the necessity of a purchase, it’s worth waiting 24 hours or a few days.
Instead of shopping at the mall, distract yourself with a walk, visiting a museum, exercising, reading a book, or watching an interesting movie.
Loans should only be taken in extreme cases:
- to purchase housing,
- for necessary work-related items,
- for medical treatment.
Financial Literacy is not just a way to accumulate wealth, but a necessary condition for a stable and secure life. The ability to manage finances wisely allows you to build a confident future. By starting to develop financial literacy today, you will secure a reliable tomorrow.
