5 Ways to Level Up Your Financial Skills

Level Up Your Financial Skills

Achieving competence in any category requires study, but to be truly skillful takes practice. You can level up your financial skills by studying basic investing, APR vs interest rate, and how your personal credit score is calculated. There are several free courses online for each of these. Once you understand the concepts, put them into practice with the following actions.

  1. Learn how to budget your income

All financial actions, whether personal or business, begin with a budget. Unfortunately, most consumers only budget what’s “leftover” after spending most of their paycheck. Proper budgeting is done by examining all your expenses, weighing them against your income, and reducing your costs in areas where you’re spending money you don’t need to spend.

  1. Understand the difference between wants and need.

This is an extension of the first point. During the budget process, it’s important to understand the difference between wants and needs. Food and shelter are necessities. Premium movie channels and the newest version of your favorite video game are not. Achieving financial wellness may require some sacrifices in the “want” category.

  1. Replace a spending mindset with a savings plan.

What’s left over after you meet the needs in your budget is not “free money” to spend on whatever you like. Replace that spending mindset with a savings plan. This takes discipline, but the long-term rewards of building wealth in a savings or emergency account include peace of mind and financial security. Nothing you buy on Amazon today can give you those.

  1. Take a finance or investing course online.

Many of these courses are free. Those that aren’t range from inexpensive subscription services to accredited courses that could cost several hundred dollars. Treat the expense as an investment because knowledge is always valuable. The stock market isn’t as complicated as most people think. Learn the basics so you can start investing in stock and bonds.

When choosing a course, it’s important to consider your needs and goals. If you’re a beginner, start with an online course covering the basics of personal finance or investing. Yet if you’re more experienced, choose a course that focuses on a specific area of finance, such as stock market analysis or technical analysis.

It’s also important to check the online course provider’s reputation. Some of the most reputable financial and investing course providers include Alison, Khan Academy, Udemy, Coursera, and edX. To hone your financial skills, ensure to commit to finishing your chosen financial and investment course.

  1. Set short-term and long-term savings and investment goals.

Goals are important. Set some short-term and long-term savings and investment goals with your new savings mindset and investment knowledge from that finance course you just took. Be realistic when you do this and leave some margin for months when expenses are higher. Saving and investing is a marathon, not a sprint. Take your time and build for retirement.

Building wealth for retirement takes time and discipline. If you’re unsure how to invest your money or create a retirement plan, it can be helpful to get a financial advisor. A financial advisor can assess your financial situation and create a good wealth plan that meets your needs.

In addition, don’t forget to protect your financial assets by getting insurance and investing in long-term wealth-protection solutions. Life insurance, like whole life insurance, can accumulate cash value over time. This money can be used for retirement expenses, such as healthcare costs or a long-term care facility. You might consider setting up a pension death benefit trust to ensure your family’s financial security after your passing.

Extra Credit: Retirement, Real Estate, and Cryptocurrency

The American Dream is to own your own home and retire comfortably with a pension or well-funded 401(k) plan. At this stage, your investment plan should already include retirement savings. Now is a good time to research terms like “maximum annual contribution” levels and “required minimum distributions” (RMDs). Both can affect your retirement income.

As for owning your own home, it’s hard to dispute that as a good investment strategy. Historically, home values have gone up over time. You want to level up in this area by studying how buyer demand, available inventory, and interest rates affect your long-term profitability when you buy a house. This is advanced financial stuff, but it’s worth knowing for the future.

Finally, we’re going to add in cryptocurrency investing. This would have been laughable in an article about leveling up your financial skills five years ago. Today, crypto has become too big to ignore. Most investment advisors are now including it in client portfolios. Forty-six million Americans currently invest in Bitcoin. Include this in your course of study.

Notice: Information provided in this article is for information purposes only. It does not necessarily reflect the views of or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may also receive compensation from advertisers for links to third-party websites.

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