10 Tips to Improve Your Financial Literacy Today
April is a month full of new beginnings as the air becomes warmer and signs of new life appear in the form of flowers and budding trees. In the spirit of a fresh start, April is also a month dedicated to financial literacy. Improving your financial literacy is a lifelong pursuit that will help you achieve your goals and live your ideal lifestyle. If you're ready to level up your money skills, commit to these ten tips to build your financial repertoire.
What is financial literacy?
Financial literacy is a skill set that allows you to make wise decisions with your money. The main objective of financial literacy is to cultivate a strong understanding of how money works and financial concepts that will help you make the most out of your earnings.
The great news is that if you are a part of the cryptocurrency community, you are already many steps ahead of the curve. If you have a good understanding of bitcoin and how it works, then you already have an excellent grasp of financial systems and economic theory as it applies to currency. If you are not there yet, have no fear. We have plenty of resources to get you up to speed. For starters, check out our Beginners Guide to Buying Bitcoin.
Read on to discover some of the key elements of financial literacy that you should know as part of your journey into cryptocurrency.
10 Tips To Improve Your Financial Literacy
1. Create a Budget
One of the most basic ways to stay on top of your finances is to organize your expenses with a budget. A budget is a plan for every dollar you have. To start, keep written documentation of all your monthly payments. There are plenty of ways to go about this, including many different apps, but the simplest way to get started is by creating an Excel sheet that lists everything transaction you made during the month.
Seeing your obligations in one place will give you a clear picture of your expenses and help you identify any problems in your everyday expenditure. Next, calculate your monthly income and decide your budgeting method. Your budget should cover all of your needs and some of your wants. Once you've crunched those numbers, you're ready to think about how to achieve your financial goals.
2. Set Financial Goals
Where do you want to be monetarily by the end of the year? In five years? Are there any big purchases you would like to make sooner than later? A new car? A house? Having a clear vision of your ideal financial future is the first step to achieving your dreams.
Just remember to be realistic about your goals - as much as we all want to be crypto millionaires in the next five years, that will not happen for many of us. Setting short-term and long-term financial goals will help you improve your fiscal well-being over time by giving you direction, purpose, and motivation.
3. Save a Portion of Your Income
Always set aside a portion of your monthly income to add to your savings, no matter how small the amount. Having money in savings will give you something to fall back on in case of an emergency, in addition to helping you achieve your financial goals. The general rule of thumb for savings is 20% of your income, but if that is not feasible, be sure to put something away, aiming for 20% whenever possible.
4. Invest Early and Often
We all wish we bought some bitcoin when we first heard about it, and fantasize about the would-be gains. When it comes to investments, the best time for getting started is yesterday. The sooner you invest, the better it will be for your long-term plan. Split your savings between a savings account and investments.
5. Diversify Your Investments
A good investment portfolio is a diverse one. To most people, this means not putting all your eggs in one basket like putting all your money into the stocks of just a few companies. However, to achieve a truly diversified investment portfolio, storing your money in assets that are not linked to something else is essential. An excellent example of this is bitcoin. Bitcoin exists independent of any country, government, or local economy. In times of financial uncertainty, bitcoin is not negatively affected. If anything, bitcoin is more likely to see a rise in value during economic turmoil, as we saw during the COVID-19 crisis.
It is also a good idea to keep your crypto portfolio diverse as each token brings something a little different to the table. Learn more about different cryptocurrencies to invest in here.
6. Get a Grip on Taxes
It is crucial to understand how taxes work, especially if you are involved in crypto. Having a good understanding of how the IRS views bitcoin and other cryptocurrencies will save you from potentially owing back taxes. To make sure you are ready for tax season, always keep a careful record of your Bitcoin activity. Keep track of the market value of your BTC when it was mined or purchased, as well as a log of its market value when you used it or sold it. This information will help you keep track of where you stand with Bitcoin on your taxes. For more information about Bitcoin and taxes, check out this article covering everything you need to know.
7. Make Sure Your Money is Safe
To make sure all of your hard-earned money doesn't disappear, you will need to make sure it stays protected. For those invested in cryptocurrency, this means keeping your digital wallet guarded. One of the golden rules of cryptocurrency is never to leave your coins on a wallet hosted by a crypto exchange.
When using bitcoin or other cryptocurrencies, it is vital to keep your private key private because it ensures that no one but you can access your bitcoin. Digital wallets hosted by third parties like exchanges keep control over your private keys. This means that if the exchange becomes compromised in any way, you could potentially lose your crypto. To ensure you have complete control over your crypto, use a non-custodial wallet to store your coins. Learn more about how to keep your crypto wallet safe here.
8. Ignore the Noise
Crypto critics may preach that cryptocurrency is just a fad that is doomed to fail. As cryptocurrency becomes more popular with mainstream investors, so will the fear, uncertainty, and doubt from skeptics. To be successful in the crypto space, it is most beneficial to buy and hold in the coins that you genuinely believe in while ignoring all the noise around you.
9. Pay Attention to Fees
Understanding the fee structures of the products and services you use and the amount you have been paying every month is extremely important. If you haven't already audited your fee expenses, it is highly recommended to do this as soon as possible. You may be surprised by how much you are paying in fees each month. Fortunately, as a CoinFlip customer, you can feel confident that you are paying the lowest fees in the Bitcoin ATM industry, guaranteed. To educate yourself on CoinFlip's transparent fee structure, check out this article.
10. Stay Educated
One of the best aspects of being a part of the crypto community is that it allows you to have a deeper understanding of money. The more you understand economics and finance, the better you can take charge of your financial future. The more you keep up with what is happening in the financial world, the more likely you are to move forward from where you are. Stay up to date with the latest industry trends in finance and crypto by subscribing to our weekly newsletter, The Weekly Flip Thru. Sign up here.
Financial literacy is a skill that will help you elevate your lifestyle and make the most out of your financial situation. While April serves as a reminder of the importance of financial literacy, honing this skill requires year-long dedication. Apply these ten tips to your life each month, and your financial future is sure to be bright.