The definition of Financial Literacy is the ability to understand finance. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective through their understanding of finances. This would include the ability to choose and manage a credit card, the skills about savings and investing for retirement and the awareness on risk. Why is this important?
- Many people are failing to plan ahead
- Many people are taking on a financial risk without realizing. This could happen when we do not have enough information on what we are doing or investing
- Problems of debts are severe and people are not able to manage the debts which will lead to bankruptcy eventually
- Those under 40s, ,which include myself are less financially capable than their elders
- It is easier to get a credit card now and card holders are not aware of the over the interests charged to the card. Subject to interest being charged.
At the age of 21, I am earning an annual income of more than 30k which automatically qualifies me to subscribe a credit card. Not one but five, with a max credit limit of 10k per card. So I have about 50k in my account. Being young and naïve, I do not really fully understand the terms and condition, the pro and cons of having credit cards. To make things works I am a shopaholic addict. I am addicted to online shopping. A shopaholic and credit cards in her hand. What will be the outcome of it? She got herself drowned deeper and deeper in debts. There was a period of time where I had constant calls from the Bank reminding me on my late payment. Unfortunately, there was nothing I could do. I couldn’t afford to even pay for the minimum interest. I was in a state of desire. I received stacks of letter and some of which were sent to my workplace. Most of them were legal claims against me. As expected, I was called up by my HR personnel to discuss on this. My easiest way out back then was to file for bankruptcy. I didn’t know what will be the effect of it and all I ever wanted was to get out of the mentally pressured situation. If there was a second chance for me in life, I would say no to credit cards. Over the period of four years, it brought me nothing but trouble.
Luckily for me, I didn’t file for bankruptcy. I did my research and I seek consultation from a financial advisor who happened to be one of my dad’s friends. Through my findings and books that I have read, it gave a second leash of life to start over again afresh. It was then that I began to fall in love with books on personal finance and credit management. One of my favorite is “Rich Dad, Poor Dad” which I have been reading and it keeps me motivated and plan ahead for my future. I called up all the creditors and started on my negotiations. I managed to get my agreement into writing and I was able to make a prompt monthly payment again. Through my experience, I have learnt the importance of managing my money, savings and investment. For an example, I used to think of a car which I’ve bought as an asset and not a liability. Now, I have a different mindset. Only something that will bring in money into my account will be classified as an asset; otherwise it will be under my liabilities list.
- Many people are failing to plan ahead
- Many people are taking on a financial risk without realizing. This could happen when we do not have enough information on what we are doing or investing
- Problems of debts are severe and people are not able to manage the debts which will lead to bankruptcy eventually
- Those under 40s, ,which include myself are less financially capable than their elders
At the age of 21, I am earning an annual income of more than 30k which automatically qualifies me to subscribe a credit card. Not one but five, with a max credit limit of 10k per card. So I have about 50k in my account. Being young and naïve, I do not really fully understand the terms and condition, the pro and cons of having credit cards. To make things works I am a shopaholic addict. I am addicted to online shopping. A shopaholic and credit cards in her hand. What will be the outcome of it? She got herself drowned deeper and deeper in debts. There was a period of time where I had constant calls from the Bank reminding me on my late payment. Unfortunately, there was nothing I could do. I couldn’t afford to even pay for the minimum interest. I was in a state of desire. I received stacks of letter and some of which were sent to my workplace. Most of them were legal claims against me. As expected, I was called up by my HR personnel to discuss on this. My easiest way out back then was to file for bankruptcy. I didn’t know what will be the effect of it and all I ever wanted was to get out of the mentally pressured situation. If there was a second chance for me in life, I would say no to credit cards. Over the period of four years, it brought me nothing but trouble.
Luckily for me, I didn’t file for bankruptcy. I did my research and I seek consultation from a financial advisor who happened to be one of my dad’s friends. Through my findings and books that I have read, it gave a second leash of life to start over again afresh. It was then that I began to fall in love with books on personal finance and credit management. One of my favorite is “Rich Dad, Poor Dad” which I have been reading and it keeps me motivated and plan ahead for my future. I called up all the creditors and started on my negotiations. I managed to get my agreement into writing and I was able to make a prompt monthly payment again. Through my experience, I have learnt the importance of managing my money, savings and investment. For an example, I used to think of a car which I’ve bought as an asset and not a liability. Now, I have a different mindset. Only something that will bring in money into my account will be classified as an asset; otherwise it will be under my liabilities list.
If you are looking for books on Personal finance, you can try to look for Personal Finance or click on Rich Dad, Poor Dad. :
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