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What is financial literacy and how to become a financially literate person

Do you want to learn how to manage your finances effectively? This article will tell you about the basics of financial literacy, from budgeting to investing. Learn how to make your finances easier and clearer with the GlobusPlus mobile app.

Date of publication:25 September 2024

Last update:10 October 2024

Ihor Rizak

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What is financial literacy

Financial literacy is a set of knowledge and skills that help to effectively manage money and make informed decisions about capital growth using various banking instruments.
In today's world, where economic challenges are becoming increasingly complex, knowledge of the basic concepts and principles of work in this area is extremely important. Awareness in the field of finance allows you not only to avoid a debt pit, but also to ensure a stable future for yourself and your family. 
The convenient and secure GlobusPlus mobile application makes it easy to understand the various nuances and freely use your own money online. In just a few minutes, you can open a credit or debit card, put money on a deposit, and take advantage of other benefits. 

Basics of financial literacy

Financial literacy means understanding the basic principles and concepts related to money and how to handle it. These include:
  • budgeting - creating and managing a personal or family budget;
  • saving - setting aside a portion of income for future needs or emergencies;
  • investing - investing in various assets to generate income;
  • debt management - understanding how to use loans effectively and avoid excessive debt burden.

The importance of financial principles and concepts

Understanding the basics and principles of proper money management helps you avoid mistakes that can lead to serious problems. For example, knowing the importance of savings will help you create a “safety cushion” that will come in handy in the event of a job loss or unexpected expenses. Knowing how to plan a family budget will help you avoid unnecessary expenses, reducing the likelihood of situations in which you will need to apply for a loan.

The role of financial literacy in a person's life

The ability to properly manage your own money helps ensure stability and confidence in the future. A knowledgeable person is able to:
  • correctly plan large purchases;
  • efficiently use loans and investments;
  • avoid the risk of lack of funds.
An experienced person has a better understanding of opportunities and risks, which allows them to make more informed decisions.

What skills influence financial literacy

The main skills include:
  • income and expense analysis - regular monitoring of your cash flows;
  • budget planning - drawing up a plan of expenses and income for a certain period;
  • the ability to properly use bank cards, deposits, and investment instruments.

Ability to use loans correctly

An important aspect of financial literacy is the ability to use borrowed funds. For example, the Pay by installments service allows you to spread your expenses over several payments without overpayments. This is very convenient and beneficial when you need to buy something expensive, such as household appliances or furniture.
It is also important to know about the grace period on the card, when you can use credit funds without charging interest. Understanding how this works allows you to plan your payment schedule so that you overpay as little as possible.

Proper cost planning

This is an integral part of financial literacy. To do this, you should:
  • keep records of income and expenses;
  • prepare a monthly budget;
  • set monetary goals;
  • plan ways to achieve them.

Using cashback

Cashback is a refund of a portion of the money spent during purchases. Using this tool helps you save money on everyday expenses. The convenient GlobusPlus mobile application and partner retailers offer a cashback program that is worth using.

Savings in the form of deposits

Hryvnia and foreign currency deposits are one of the most reliable ways to save. They allow you to preserve and increase your funds through the accrual of interest. At GlobusPlus, it is easy to choose deposits with favorable terms.

On the benefits of financial literacy

A person who knows the basics of financial literacy can avoid many problems with money, ensure a stable future, and achieve their goals. Such awareness helps to develop a responsible attitude towards money, improves well-being and quality of life. By investing time and effort in improving your knowledge and skills, you are investing in a successful future.

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