What are financial skills?

One of the things that I often see on Social Media is how important it is to be financially literate from a young age. Having financial skills can help you make smart choices with your money and plan for your future. But what exactly are financial skills and why do you need them? Financial skills are the abilities that allow you to manage your money wisely and make informed financial decisions. Financial skills are crucial for anyone who wants to achieve their personal and professional dreams, whether it is retiring comfortably, buying a home, launching a business, or investing in the stock market. I have to admit that I was not always good at managing my money, and I made some mistakes that got me into debt with my friends and family. It was not a pleasant feeling to avoid their calls or to lie to them about when I could pay them back. That's why I decided to change my habits and learn how to budget, save, invest, and manage debt. These are the skills that I think everyone should have if they want to achieve financial freedom and security. Let me explain what each of them means and why they are important.

- Budgeting: This is the skill of planning and tracking your income and expenses, and allocating your money for different purposes. Budgeting helps you to live within your means, avoid overspending, and achieve your financial goals. You can use a spreadsheet, an app, or a simple notebook to create and monitor your budget. I used a note book and kept all my receipts to track my expenses. - Saving: This is the skill of setting aside a portion of your income for future use, and choosing appropriate saving vehicles such as bank accounts, certificates of deposit, or retirement plans. Saving helps you to build wealth, prepare for emergencies, and fund your dreams. You should aim to save at least 10% of your income every month, and increase it as your income grows.

- Investing: This is the skill of evaluating different investment options, such as stocks, bonds, mutual funds, or real estate, and selecting the ones that match your risk tolerance, time horizon, and objectives. Investing helps you to grow your money faster than saving alone, and to beat inflation and taxes. You should diversify your portfolio across different asset classes and sectors, and invest for the long term. - Debt management: This is the skill of borrowing money responsibly, and repaying loans on time and with minimal interest charges. Debt management helps you to avoid getting into a debt trap, improve your credit score, and reduce your financial stress. You should only borrow what you can afford to repay, and prioritize paying off high-interest debt first.

Saving for retirement is a smart and responsible move that you should start as soon as possible. The more you save, the more you can enjoy your golden years without financial worries. I know it's not easy to save money, especially when there are so many temptations to spend it. I'm also guilty of telling myself that I'll make up for it later, but that rarely happens. That's why I'm trying to improve my financial skills and habits, and I hope you are too. Financial freedom is a worthy goal that we can all achieve with some discipline and planning. I hope this post was useful and informative for you. If you have any questions or comments, feel free to share them below.