Financial literacy is the ability to understand the financial market by analyzing and interpreting the different variables that form the financial market. An individual with greater financial literacy will be able to understand the financial market better and take decisions that is worth it. If you are planning to make investment on share market or if you already have made investment in share market then it is very important to enrich yourself with financial literacy. With financial literacy you will be able to understand the trends that are happening on the market, identify the components of a good or bad performing stock. However, building financial literacy is a process that requires patience, time and effort. In this article we will be pinpointing ideas and strategies on how to improve financial literacy.
Empty Your Cup:
The very first step of learning something new is to unlearn. In terms of financial literacy, there are many theories and dimensions of the financial components. As a result, it is very obvious to create an idea in our head which might be far fetched from reality. Therefore, the very first step in forming strategies to improve financial literacy is to unlearn what is not necessary and relevant any more. This can be summarized by the phrase “Empty Your Cup”. It means before pouring something in a cup, it is necessary to empty the cup with whatever contents it has. To improve your financial literacy it is essential to unlearn a few things to learn new things in the correct manner.
It is the very first strategy because without acknowledging the fact that what we know is not enough and can be changed is the very first step of enlightening oneself with authentic knowledge. With the mindset of learning new things it is easier to keep on learning new things and implement them. It will help us to understand that there is no limit to learning and it is a continuous process. Financial literacy will not stop after you complete a certain training program or watch a bunch of videos on investment. Rather it is a long journey that you will have to walk.
Find Authentic Source:
The second strategy to improve your financial literacy is to find the authentic source of knowledge that you can benefit from. Once you have known the sources you can utilize it will be easier for you to create a plan around that. The authentic sources can be many. It can be a YouTube channel, newspaper, blog or even individuals who are already in the capital market for a long time. You need to consider your learning style in order to finalize the source that you can consider to be your priority. By learning style, we are referring to the fact that not everyone learns in the same way. Few individuals are comfortable with learning via reading whereas someone might prefer watching a video or talking to someone. Learning is a self-driven process. If you do not like the approach you are taking towards learning then sooner or later you will hit a pause in that journey. So it is better to learn by following the approach you prefer most.
Based on your preference of learning method, you can pick the source you want to gather knowledge from. If you are into reading you can follow many local and international newspapers that write columns on capital market, financial investment and ongoing trends. Plus you can also keep an eye on the blogs of different financial institutions, investors, brokerage houses and more. If you prefer learning through video, you can attend training courses and watch videos of experts on the subject matter. Last but not least, if you prefer to get real life experience and knowledge it is better to consult and talk with someone who is already in the market. For example, if you know someone who has been trading in the stock market for a long time you can approach him and consult with him regarding your next move in the stock market.
Therefore, based on your preferred style of learning you need to figure out the source that you consider as the most authentic source for the knowledge.
Learning Through Sharing:
There is a saying that goes like “By learning you will share and by sharing you will learn”. It implies, with sharing of what you have learned you solidify your learning journey. So the strategy we are suggesting is to share with peers and friends about what you learn. If you think it is not your cup of tea, still you might give it a try in some form or other. Because, when you know you will be sharing the learning with a group of people, you will be more focused on ensuring you have learnt it to the full extent. Plus learning and sharing with peers will also give you new avenues to explore.
In a practical scenario, you can start sharing what you learn over the dinner table, your social media, in the community of like minded people etc. Or at least, you can keep a journal or personal blog to summarize, analyze and reflect on what you have learnt. This will make your learning journey less boring and will give you more scope to enrich your knowledge base. Do not dwell over the thought that you can not share anything until you are an expert. Because as a learner you are always welcome to share what you have already learnt. It is not about sharing your own theory or idea rather you can start with at least sharing what you have learnt as it is. This will give strength to your financial literacy and this strategy will help you to improve your financial learning to a great extent.
Diversify Your Learning
Just like your investment portfolio, you need to diversify your learning as well. You cannot be limited to one source or type of knowledge rather it has to be a perfect blend of many components. It is important to keep an eye on what is happening in other countries and how the share market is responding to those happening. It will give your idea about how the share market operates on a global scale. Along with that, it is very much significant to keep track of the news and updates as the share market is often influenced by the changing dynamics of the environment. On the other hand, you need to measure the trend and patterns of stocks you have invested in to understand the trajectory it might follow in the near future.
So the learning has to be diversified. News, blogs, case studies, technical reports, company annual reports and many other sources have to be considered at the same time. It will give you a solid set of information that you can use to make decisions that are timely and effective. Therefore, ensure you learn from as many sources as possible and connect the dots and have a strong knowledge base.
On The Job Learning
The term on the job learning refers to learning something by doing. In the case of financial literacy, learning can give you practical pathways to understand the market, identify the trends, make decisions that are effective and most importantly learn through the process. However, on the job learning can cost you money so it has to be done carefully without taking big risks. For example, if you are a beginner trader in the capital market, you should not spend money on a stock just to go through the experience and learn because it can backfire. So you have to take calculative risk so that the learning process does not become a burden to you.
Moreover, on the job learning will give you the opportunity to learn from experts as well. Take advice, suggestions and consultations from the individuals who have been doing this for a long time. These learning are practical and it will help you to foster knowledge that is practical and real life. It will open you up towards a practical learning experience that you can implement and measure the effectiveness of the learning.
By implementing these strategies, you can develop and improve your financial literacy. We cannot emphasize more on the fact that it is a continuous process. If you are serious about making a fortune in the capital market, the journey of improving financial literacy is a lifelong journey. It has to be followed seriously and religiously for a substantial outcome. With these strategies of improving financial literacy you can start your journey as an investor or make your existing journey a fruitful one. To summarize, the strategy to improve financial literacy is to empty your cup by unlearning things that are irrelevant. After that find an authentic source of knowledge and information that you prefer to learn from. Then gradually share with others about what you have learnt. In the meantime, do not forget to diversify your learning source so that you are not limited to only one source of learning. Last but not least, improve your financial literacy by learning by doing. These are the strategies that will help you to improve your financial literacy.