How much do you know about financial literacy?

Financial literacy is a term that is thrown around a lot these days, but what is it really?

In simple terms, financial literacy is the accumulation of our knowledge, our experience and our relationship with money.

By being more knowledgeable, it helps us develop our financial skills, from budgeting to investing and everything in between. But it’s not something we learn overnight! We keep polishing our knowledge throughout our lives.

Financial literacy can lead us to better outcomes and will enable you to make more informed decisions about your situation, such as:

  •  How to effectively save your money
  • Making decisions involving profit and loss
  • Making good purchase decisions despite strong marketing influences
  • Understanding consumer law and your rights, and
  • Product safety

Learning about personal finance and how that impacts your day-to-day life is a huge step in the right direction. So, where do you start?

What does financial literacy mean for you?

It is different for everybody, as we are all in different situations with different needs and requirements when it comes to money. Overall however, financial literacy means that you start a journey and continue to educate yourself on a range of money-related topics. This really helps you with ongoing financial stability and provides you with the skills that can help you reach your financial goals and improve your standard of living.

These skills will ultimately empower you to invest and create wealth in various ways. They help you to form healthy spending habits and understand the value of money and the hard work that goes into earning it. When emergency situations arise, as they do, it becomes a little easier to negotiate and not come out of the situation in a worse position.

There is a world of knowledge relating to finance, and sometimes it can be quite overwhelming to make decisions. But with dedication and perseverance, you will gain the skills that you will need to understand in order to make informed decisions for your future. Equipping yourself with these skills enables you to be successful in your financial choices and investments.

How to set up an effective budget

Budgeting is a very useful tool for succeeding in your financial goals. It’s also a great way to understand what you can afford while also allowing for saving money as well.

A budget really comes down to this simple formula:

Savings = Your Income – Your Expenses

So, let’s start with your income:

The best place to start is to know what your pay is after tax and superannuation. This is the income you receive in your bank account during a period and generally the amount you can afford to spend each month.

The next thing to know will be your expenses:

What are your absolute necessities? Things like your phone bill, fuel or public transport, internet, food, groceries, etc. Once you have those details you can make sure to put money aside to cover those bills throughout the month.

Now, you can figure out how much you have left to save:

With your savings, do you have a goal in mind that you want to put that money towards? Are you thinking about investing a portion of the money? Do you have a trip coming up? Is the next gaming console coming out that you’ve been waiting for? Whether it’s a long-term goal or a short-term goal, having a target to aim for is always helpful to keep you on track with your savings.  Savings are also great to have as unexpected expenses may pop up from time to time and the extra fund put aside will alleviate the stress of dealing with these surprises.

We all have our own ways of breaking down our spending habits. Find what will work the best for you and go with that.

There are a lot of personal finance apps available in the market these days that help you track your income and expenses. Some of them have amazing tech that connects to your bank accounts and automatically categorises your income and expenses! 

What else is there to consider?


Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to surpass inflation and gain value. To be successful in this, you should learn about key components when it comes to investing. This includes things like what your risk appetite is and your long-term or short-term outlook and expected returns in that time. And if you aren’t sure, there are plenty of professionals out there that can help with financial planning!

Learning about important investment opportunities can allow you to make smarter financial decisions that may result in an increased inflow of income.


Almost all of us will end up borrowing money at one point in our lives, whether it’s for a car, house, or furthering our study. To make sure you are borrowing smartly, an understanding of interest rates, compound interest, time value of money, payment periods, and loan structure is imperative.

It is also important to understand the consequences of borrowing money and how that can affect your future. With things like buy-now-pay-later easily on offer, if you take up a facility like this and don’t repay the money, this can have a longer-term impact on your credit score and your ability to get a loan in the future.

Always make sure you have a plan to repay anything you borrow and on time! It’s a financial contract you are entering into with some serious repercussions if you don’t meet the terms of that contract.


Superannuation is something that you receive, but don’t really see the benefits of it when you are younger. It accumulates over time.  Superannuation will be one of your most important assets when you hit retirement age. Having an understand of your super now, how it works, and what you can do to make the most of it will help you move toward a more financially-stable future.


So, the point that I want to leave you with today is that, as you consider ways of improving your understanding of your own financial situation, don’t overlook the basics. Do your research, see where to start and make a plan that will work for you. Keep learning and stay on top of the ever-changing financial environment around us.

Most importantly – don’t be afraid to ask questions. Open conversations about money can provide some life lessons and new ideas that you hadn’t thought of before.

Marie Mortimer

Managing Director

Author: Marie Mortimer

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