Financial Literacy and Common Mistakes in Personal Finance

Financial Literacy: Where Does the Money Go?

Making money is a kind of science, but neither the school nor the university teaches it. What we are learning is just a way to build a career. Many of us think that a high salary is a way to solve all our financial problems. In fact, a large amount of money doesn’t solve all the difficulties, but thanks to knowledge, we can earn it and manage it competently.

Education gives us the opportunity to determine the future profession and the opportunity to earn money in a certain field of activity. However, life experience and financial literacy allow you to become richer. Do not drop your studies, use paperocket.net  and start to rule money right now.

Basic Steps to Financial Literacy

Understanding the basic components of effective financial management can help you to establish a personal budget. Having mastered key elements, you can grow and move to a new level from personal cash flows to managing your own business. What points do you need to internalize?

  • The definition of a problem is the first step towards solving it. First, you need to record your own expenses. Regular accounting of costs and revenues will determine those zones where there is a bias and as a result the formation of debts.
  • Cost optimization. Divide your expenses into mandatory or clearly needed and situational ones. Additional costs arise as a result of the imposition of products by marketing or impulsive desires. The cost of money should bring a certain value. If you buy food, then it brings you energy. But, if it’s fast food, then it’s not good and can cause health problems.
  • Finance plan. Monthly indicate income and expenses. Constantly compare and indicate violations. The purpose of your financial plan: you should have enough money for everything.
  • Increase income. There are two main approaches to increasing profits: improving productivity and a new source of finance. The first is based on time management, where you use the time the most effectively that allows you to earn more. The second is providing additional services, expanding the range, developing new skills for more highly paid work, etc.

5 Mistakes in Personal Finances

It would seem that the principles of personal finance are understandable and accessible, but there is still not enough money to make any savings. There are several mistakes that we make without noticing it.

Mistake 1. If I Have an Unstable Income, I Can Not Control My Income and Expenditures.

Even if you have an unstable income schedule, you can predict your expenses. In order to balance your financial plan, calculate the average monthly income for several months. Divide the total amount of income for the period by the number of months. If you have a monthly expenditure that exceeds your monthly income, you will always go into minus. 

Tip: Calculate the stop-amount, that is, the maximum amount of money that you can spend in one day and do not exceed it.

Mistake 2. If I Have a Small Income, Then Investing Is Not for Me. 

Train investment skills. Whenever you have even a small amount left, put it on a debit account. In the future, when you have any additional income, you are in the habit of saving money. Otherwise, you will definitely find where to spend the money that has appeared. 

Tip: The market for mobile phone games offers various options for training skills in handling financial flows in the form of a game. Try it, you risk nothing.

Mistake 3. As the Revenue Increases, You Automatically Increase the Spending.

It would seem possible to relax and get new goods. True, after a while you will not have enough money again, and savings have not appeared. Many financial gurus say, if you could live on some amount of money per month, then with an increase in income, you can continue to live on the same amount. 

Tip: Сreate a separate debit account where you will transfer money every month without the possibility of withdrawing them.

Mistake 4. Not Using Bonus Programs. 

Many banks offer bonus programs or cash back. Paying regularly with a bank card, you get points or money for an additional virtual account. In the future, you can use them to buy the necessary things or simply cash out. Find out what programs your bank offers, they can be different.

Tip: Many stores and companies provide bonus programs for their customers. Look closely at the store where you make regular purchases, perhaps it is also ready to credit you points. 

Mistake 5. Different Financial Approaches Within a Family.

When you are running a joint family budget, it is important that you and your partner go in one direction. Combine your goals and plans and strive for financial well-being together. When you indicate the needs and capabilities of each other, you will avoid quarreling in the future.

Tip: If you can not manage a financial plan together, then entrust it to the one who is better at it. To control the costs of other members of the family, it is enough to have a graph of each member’s expenses. You do not have to try out what exactly money was spent on, you’ll just understand how much each member spends. 


Financial literacy and plan affect income. People who do not plan their financial resources are faced with the fact that they are draining away. Using simple tips and techniques, you gain the opportunity to invest to make more profit. As a result, you achieve such desired financial freedom. Good luck!

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