The new year is swiftly approaching which means one thing: we’re facing the annual dilemma of setting New Year’s Resolutions. Up and down the country, people are frantically contemplating ways to create new habits, improve their lifestyle, and achieve their goals. Each year, many of us add similar items to our New Year’s Resolutions lists: ranging from improving our health through diet and exercise; saving X amount of money (perhaps to buy a new car, or get on the property ladder); or, advancing in our career.

Although New Year’s Resolutions are tailored to your individual goals, what’s at the top of MY New Year’s Resolutions list this year (and the one thing I believe we should all be considering) is to increase my (our) financial literacy. This is so much more than resolving to save £X; it’s improving your understanding of budgeting, saving, and investing in order to make informed and confident decisions when it comes to your own finances. Read on to discover why financial literacy is so important, and the practical ways I’m going to achieve it.

First of all, what actually is financial literacy?

“Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. [It’s] the foundation of your relationship with money” – definition from Investopedia.com.

Why is it so important?

This year, we’ve been bombarded with news headlines about record inflation levels, the weakness of the Pound, falling exchange rates, and the possibility of an imminent recession. These are just a few examples from what has been a financially-heavy news period. And it has been unavoidable – TV, radio and social media platforms have all been showcasing the same stories. Many of us read these headlines, but how many of us actually understand the practical implications on our own finances?

We know that news sites are often guilty of fearmongering; publishing exaggerated headlines with dramatic wording to increase the public’s concern. Of course, this is amplified when we lack understanding (things always sound worse when you don’t fully understand their significance) and when we are panicking about something that is important to us (such as protecting our hard-earned money).

Financial literacy can be a very powerful and valuable asset in seeing your own way through the noise, especially given the current economic climate. Increasing your knowledge is a way of protecting and empowering yourself and your family, and improving your current and future financial positioning. Instead of blaming the education system for not teaching you these valuable life skills (that’s a discussion for another time!), take your learning into your own hands so that you can push aside the fearmongering headlines, extract the essential information, and make relevant decisions to fit your circumstances.

This knowledge will continue to be relevant throughout your life: it’s never too early to start learning. After all, devoting time, energy and resources into yourself is one of the best investments you can make.

How can I improve my financial literacy?

Thanks to the internet, we can access countless sources of information and financial expertise whenever we like. What’s even better is that there’s a variety of free and paid options available (both on and offline), making it an accessible topic to learn about. After a little research, you’re bound to find an option which suits your needs.

How I’ll be improving my financial literacy:

Please note, I cannot recommend any of the following sources as I’m yet to begin my own journey towards financial literacy. Following a small amount of research and understanding how I like to receive information, these are the sources I’ll personally be focusing on.

Reading financial books

There are a range of topical books available; from broad, all-encompassing books to niche areas, you’re bound to find something suited to your interests and level of understanding. My dad, who has generally been the one guiding our family in most things financial, gave me a copy of The Meaningful Money Handbook, written by Pete Matthew, a leading Chartered and Certified Financial Planner, as well as financial podcaster and YouTuber, based here in Cornwall. I’m looking forward to getting my teeth into this in January (look out for the review coming soon).

Edit from the future: the book review is now live! Click here to find out how I got on.

Podcasts & Youtube

Recently, I’ve been loving listening to podcasts and sit-down, talkative Youtube content whilst doing housework and general chores. I find it a great way to keep my mind busy whilst doing physical work, as well as an effective use of time – some days you just don’t have time to sit and read – that’s life! It’s helpful, therefore, to have a passive way of digesting information up your sleeve.

In the new year, I’ll be searching for financial content creators on these platforms and listening along.

Social media

I recently stumbled across the Instagram account, This Girl Talks Money, which was suggested on my “explore” page. She has great, bite-sized content: I’ve particularly enjoyed her recent series of posts which uses submissions from followers, showing their changes in salary, spending habits and attitude towards money in their 20s compared to their 30s.

I’ll be increasing the number of informational accounts I follow across social media platforms. I’m hoping this will be an effective way of learning – through small-scale, almost subconscious, daily exposure.

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These are just a few methods for improving financial literacy. The above are my preference, but please note, they may not work as well for you: perhaps you would prefer to read long articles or journals, or undertake a course.

Consider how you would like to receive the information – is there a particular format you prefer? What level of knowledge are you starting from? How much assistance do you require? What are your specific financial goals? All these factors will influence the methods you choose to use. Spend some time researching until you find a combination which works for you.

Sticking to your new year’s resolution

We all know that, despite the best intentions, lots of people give up on their New Year’s Resolutions within the first few months. I think that often this is because people go too hard, too fast, set unrealistic targets, and lose motivation if they don’t see immediate results. This seems to be the case more so for resolutions with concrete goals, e.g. losing X lbs or going to the gym X times a week.

This is where the goal of improving financial literacy differs: rather than having a concrete goal, it’s incremental. The way I see it, any increase in knowledge is better than none at all. If your goal is to simply “learn more” rather than completely understand and memorise every detail of economics, you can’t really fail.

Just think – if you spent just 10 minutes a day learning, imagine how much your understanding would’ve improved after one month, let alone the whole year.

I’m really looking forward to the new year and working towards my own financial literacy. I hope this has inspired you to do the same. Let me know in the comments below what your new year’s resolutions are, and if you’ve already begun your journey to financial literacy, why not share your own recommendations for sources of information?

These are my own techniques and suggestions for learning more about the financial industry. This blog post and its contents should not be taken as financial advice. For legitimate financial advice, always consult a professional.

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