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Five key components of financial literacy

Illustration of budgeting

Hello and welcome back to school, and for our newcomers, welcome and all the returners welcome back! This week will pick up right where we left off, let’s talk financial literacy.

Here is a quick recap: The blog’s purpose is to provide you with the necessary skills for a sense of financial awareness. What is financial literacy? Financial literacy is “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing” (The President’s Advisory Council on Financial Literacy, 2008).

While researching financial literacy, five key components consistently appear. The five components are earning, spend, save, and invest, borrow, and protecting. During the continuation of this blog, we will better investigate each of these components of financial literacy. We ended the year on saving, and I hope that you had the opportunity to save, save, and save more money than you anticipated over the summer. If not, that is ok. I have good news for you; it is always ok to begin again. 

Daryl Singleton
Daryl Singleton

Last year we learned that earning is “when you trade your time and energy for money” (Donati, 2020). In laymen’s terms, you earn by the hour working during the time allotted. Spending money is/should be the perfect way to increase your overall value. Spending money should be a well-thought-out process, and the best way to remedy financial literacy is by budgeting. You must be willing to save according to what seems to stretch you beyond your limits. Saving can, at times, feel like a sacrifice because it is. Living in a society that thrives on instant gratification can rob you of the joy that comes after persevering. In the coming weeks, well will cover investing, borrowing, and protecting your money.

I want to caution you that as we explore, together, that you take what is necessary for your financial health. In other words, this is not a one-model-fits-all blog. This blog is a person-centered-approach blog where you collect information that is beneficial for your financial wellbeing. Let’s build!