Financial literacy has no final destination, it’s a lifelong process.
We tend to be emotional decision-makers when we buy everything from cars to groceries—the same applies to our finances. Ruthless self-awareness is a practical financial tool to mitigate our worst impulses and avoid succumbing to bad money moves. Think about it. If you recognize that holiday shopping, for example, triggers emotional spending, then it becomes substantially easier to prevent moving forward. It’s only when we recognize the habits that don’t serve us well, that we can begin changing them. By being brutally honest with ourselves, we can erect and maintain guardrails against self-sabotaging financial behavior. It’s empowering to control your money instead of being controlled by it.
Awareness illuminates negative financial habits, but self-control gets us to act on it (or not!). Exercising self-control can be incredibly tough and certainly not very fun, but it’s necessary when financial empowerment is the goal. Plus, it’s easier to exert self-control when we’re fully invested in reaching meaningful milestones, like saving for a down payment, or paying for college. Taking full ownership of our monetary decisions is empowering, and becoming financially literate has a positive effect on our mental health. Not surprising, eliminating the stress, worry and mystery that surrounds money can be an enormous relief.
Financial literacy is a series of good habits, and it’s a worthwhile investment in obtaining peace of mind, avoiding temptation and securing a brighter financial future. Being able to make practical financial decisions is a skill that everyone should possess, especially now that we’re in the throes of a pandemic.