Surprisingly, one of the biggest skills that can significantly impact your lifetime financial success isn’t commonly taught – at least in specifics – in school unless it’s your profession.
You can graduate with a 4-year degree (high school or even college) and if business or finance wasn’t your major, you’ll likely have learned little about personal finance or investing. Just think—doctors, attorneys, teachers, or other service providers – can even open their own “business” and not have any idea how to read, much less create, basic financial statements.
Financial literacy is an important skill for pretty much anyone to have, especially when building and enjoying financial independence is a goal. Yet, it’s not uncommon that one might have to take it upon themselves to get that education. However, it’s likely not a stretch to say that any effort you make in strengthening your financial competency is usually worth it in the long run. If you are willing to commit the time and effort, you too can enjoy the advantages that come along with being financially literate. Free retirement income planning workshops are available that contain concrete information and strategies that can potentially point you in the right direction.
Here are some of the reasons why increasing your financial knowledge makes sense:
- Some investment “advice” you’ll get throughout life isn’t always “wise”
Whether it’s a well-meaning relative or a good-intentioned co-worker, you will likely frequently encounter people throughout life who want to tell you what you should do with your finances. Yet, often these people have no more real “knowledge” or experience than the average person.
Then, there is the fact that, sometimes, even knowledgeable and experienced financial advisors can’t agree on the best strategies or tactics for wealth-building and preservation. One may say one thing, while another will say something that totally contradicts the first. It can be confusing not only to figure out what to do, but also deciding which advice to take and which to throw out.
In actuality, most financial principles are too complex to be explained in a brief article. The reality is that, oftentimes, each item of conflicting advice is partially true and partially false, depending on the situation and your individual circumstances.
- Everything Doesn’t Always Go According to “Plan”
The “secret” to investing is that there are no secrets. Have you vowed to only listen to financial advisors who seem to follow the consensus or “best practices”? Well, even among the “leaders” there is no shortage of different ideas, plans and “systems” out there for you to find. Unfortunately, what you typically can’t get in a system, is a guarantee. Furthermore, you often can’t be sure that a specific process or strategy is best for you and your situation. Generally, most of the information and guides you find publicly is going to be… general and generic. Yet, you need personalized advice to put you on the path toward financial independence.
- Financial Literacy Helps You Evaluate “Advice”
The one person you always know is 100% dedicated to your financial success is you. Others might have a conflict of interest. Or they might be misguided or misled themselves. Financial literacy can help you ensure that any advice you get is right for you. And that any actions you take – or that are taken on your behalf – are as wise and well-intentioned as possible.
- You Can Delegate Authority, But Delegating Responsibility Can Be Risky
Most people want and even need to believe their financial advisor(s) will take care of the big financial landmarks in life like college savings, wealth planning, and retirement. But whether you hire the best financial advisor you can find, or decide to manage your finances independently, you ultimately have the biggest stake in your results. Thus, taking the responsibility for, at minimum, understanding decisions made and steps taken on your behalf, helps you affirm to yourself and your loved ones that you’ve done your part in planning for your financial future.
- Increasing Your Financial Education Is an Investment That Doesn’t Lose Value
Financial education is an investment that pays dividends for the rest of your life. And you can’t lose it. Once you know it, you can’t ever “un-know” it. Even better? The sooner you start your financial education, the sooner you can be more confident in your financial decisions.
- Financial Independence Requires Financial Intelligence
Financial independence doesn’t require knowing everything about finance and it’s not necessarily synonymous with making all financial decisions on your own. Rather, it is having enough of a background to know who to trust, when and where to trust them, and if you might need to look elsewhere for advice or management.
Relying on others to make financial decisions for you might be the right thing to do in some cases. However, it’s also good when you at least broadly understand the advice you get, or actions being taken on your behalf. Otherwise, you are operating only on faith. And while in many cases, that might turn out fine, it also might not. Having financial competency often lets you see the warning signs of potentially negative situations earlier. On the other hand, it also helps you appreciate those who are helping you – and doing the appropriate things for your situation – consistently over time. In either case, the power now lies more squarely in your hands.
Securities offered only by duly registered individuals through Madison Avenue Securities, LLC (MAS), member FINRA/SIPC. Advisory services offered only by duly registered individuals through Global Wealth Management Investment Advisory (GWM), a Registered Investment Advisor. MAS and GWM are not affiliated entities. Investing involves risk, including the potential loss of principal.