Financial literacy is the ability to manage your money rather than letting it manage you.
Nurlan Beishembayev, a financial expert, asserts that just as learning to read and write eliminates illiteracy, financial literacy comes with the skills to manage personal finances.
The main principle of financial literacy is the ability to effectively use available resources, regardless of income level. To become financially literate, it is important to acquire the necessary knowledge. There are many educational materials and methods available online,” he adds.
Financial Goals – The Key to Success
Applying financial literacy in everyday life is the foundation of successful money management.
“Many consider saving to be a complex task, but it can be turned into a habit. Regardless of income amount, a portion of funds should always be saved. This will become the basis for future investments. The main thing is to have a plan and a goal. If a person understands why they are saving, the other steps will follow automatically,” emphasizes the specialist.
For example, a person with an income of 50,000 soms per month should allocate a certain portion of this amount for savings. The size of the saved amount does not matter — it is more important to follow this principle.
Beishembayev insists that teaching children the basics of financial literacy should start at the age of 10.
“From an early age, it is important to explain to children where money comes from and how it is spent. If money is tight, it is worth discussing: ‘We need to save.’ Some parents prefer not to involve children in financial matters, but this is an incorrect approach. A child should understand the basics of finance,” he says.
“From the age of 10, children should be given money and taught how to spend it wisely. Simply explaining without allowing them to practice is akin to teaching an instrument without the actual instrument. Therefore, it is important for a child to have pocket money and the opportunity to create a budget, track income and expenses,” the expert added.
Recording income and expenses helps control finances.
Mandatory expenses include: rent, mortgage, loans, and utility payments.
Variable expenses: food, clothing, entertainment, leisure, household goods, and personal needs.
After three months of tracking, one can analyze how much money came in and what it was spent on, as well as identify which expenses can be eliminated. Although this may be challenging, such an approach will help reduce unnecessary spending.
The 50–30–20 Rule
Another useful method is the 50–30–20 rule: 50% of income should go to essential expenses, 30% to variable expenses, and 20% to savings and investments.
Be Cautious When Purchasing
Impulse purchases often occur under the influence of advertising and mood.
To avoid this, you can use the following methods:
If you doubt the necessity of a purchase, postpone it for at least 24 hours or a few days.
Instead of going to the store, try distracting yourself with a walk, exercise, reading a book, or watching a movie.
Use loans only when absolutely necessary:
- for purchasing housing,
- for necessary work items,
- for medical needs.
Financial Literacy is not just a way to accumulate wealth, but an important tool for a stable and secure life. Only those who can manage their money wisely can confidently build their future. By starting to develop financial literacy today, you will ensure your stability for tomorrow.
