There are several important points to know when it comes to financial literacy, says specialist Petar Lazarov.
Protects against debts and bankruptcies; Allows us to live more freely and peacefully; Provides an opportunity for medium- or long-term development for business and investments; Provides an opportunity for a happy family. (Statistics, not only in Bulgaria, but also in the world, show that many marriages break up due to lack of financial literacy, lack of money and creating tension); Helps us make the right decisions in times of crisis.A person with financial literacy first makes a budget and monitors their expenses, says Lazarov. The budget is a person's financial plan. In it, we see the money that comes into the family and goes out of it. After tracking it for a few months, we have a clear picture of what exactly is happening - where the money comes from and where it goes, so that we can optimize.
A person with financial literacy has financial goals - short-, medium- and long-term. Short-term goals are 1 year. Medium-term goals are between 1 and 3-5 years and long-term goals are over 7-8 years. "As an example of a medium-term goal, we can take a child who will graduate from secondary education in 5 years. After adulthood, the so-called start of children's lives begins and money is needed for a graduation ball, a car, a wedding, but most importantly for education", explained Lazarov.
A long-term goal is, for example, to change homes. Now you live in an apartment in the city, I have children, dynamics, but in 20 years I want to have a house in a quiet place. You will want silence, clean air. It is necessary to think in perspective.
Another long-term goal is to want to retire at 60 and live happily until 90, to travel, to enjoy life.
There are such moments in life that are worth noting, to be categorized as goals.
Next thing – we avoid unnecessary debts and understand how credit and interest work. About interest - complex and simple. Types of loans - commodity, revolving credit, overdraft on the current account, mortgage, company loan. When you should and when you shouldn't. Is it allowed to take out a loan for a car, according to the standards. And for a trip, for health. What you can and cannot take out a loan for.
A person with financial culture saves and invests regularly, according to his capabilities. There are options for money - in a bank, a house, stocks, bonds, gold, real estate. There are different options - which one is the best at what moment.
It is important to understand the difference between an asset and a liability. Here we will look at the difference according to Robert Kiyosaki, that an asset is everything that brings us income now and in the future, and a liability - everything that takes away our money. According to accounting standards, one thing is an asset and a liability, but according to Kiyosaki, it is something else.
There is a reserve fund – saving for unexpected expenses. It is difficult to travel without a spare tire. The same is true without a reserve fund.
He is informed and never makes emotional decisions about the things that are ahead.
If we observe and possess all these things, we can say that we have financial culture. If we have already taken care of some of these things – everything else, we can say that we are financially healthy people. This way we will protect ourselves from bankruptcies, debts, and we will live more peacefully.