Let's Get to Know the Financial Literacy Aspects!

The Aspects of Financial Literacy – Have you heard of financial literacy? Financial literacy is a process to increase the skills and knowledge in money management. Because, apart from collecting money, we also need to manage it well, FYI.

How can we improve our financial literacy? Well, Whizmate can find ways to handle money through various sources, both from formal and informal education. The goal is so that you can understand better about finance.

Then, what is included in the aspects of financial literacy? Don't worry! This time, Whizmin will describe 5 aspects of financial literacy according to Nababan and Sadalia, some of the authors of a journal on financial literacy. Come on and see, here!

Also Read: Please Note! 8 Ways to Keep Your Household Finance Safe

The Aspects of Financial Literacy

financial literacy

1. Basic Financial Knowledge

Studying finance is a challenging thing. Therefore, you need to learn it from the basics. For example, Whizmate can begin to understand the concepts of inflation, compound interest, and asset liquidity. Inflation is defined as an increase in the price of goods and services. The occurrence of inflation is caused by several factors, such as an increase in production costs and the amount of money circulating. 

Meanwhile, compound interest is paid according to the initial capital and accumulated interest at a particular time. Usually, compound interest is used for banking and investment products.

In addition to these two things, there is also the concept of asset liquidity. In economics, asset liquidity is the degree to which an asset can quickly buy an investment in the market at a price reflecting its value. The conversion process can be fast. The acquisition is then converted into cash, checks, or even savings in the bank.

Not only that, there are several other concepts that you can learn. Make sure that you're not only understanding the definition but also learn it thoroughly. To get the information, you can look it up on the internet or ask a friend who masters this topic directly. Remember to look for credible references, OK!

2. Personal Money Management

Furthermore, financial literacy also discusses personal money management. Have you ever had a lot of money but felt like it ran out fast? Or, have you ever had more expenses than income?

Such problems can result from poor money management. In consequence, you can't fulfill your primary needs and what is on your wishlist. Then, your financial flow becomes even more ineffective.

The solution is you can learn about financial literacy. No need to worry! Because you can learn it through the Whiz Money Management App. Exciting features at Whiz will assist the process of recording and managing your finances. So, managing your finances will be more practical!

3. Credit Management

In addition to basic knowledge and management, credit management is no less critical, FYI. Credit management is a collection of information that discusses a bank's credit. The bank runs credit management. 

Its activities consist of planning, organizing, implementing, and supervising. That way, credit can run smoothly according to the agreement between the bank and the debtor. Then, why should you know about credit management? Because it can be used as a reference for granting credit. It can also reduce the risk of loss.

4. Savings and Investment

savings and investment

Savings and investments are funds that are not for consumption and are used for economic activities. Both of them need one to set aside some money. However, the difference lies in the purpose of each concept.

Saving is to collect and secure money. Meanwhile, investment means allocating money to achieve specific targets. Savings and investments have a lot to do with the level of consumption. If the level of consumption is high, then the level of savings and investment will be low—Vice versa.

5. Risk Management

A financial risk is a form of loss that can happen to anyone. Even to people managing a business. The causes vary, ranging from the expected and the unexpected. Therefore, to avoid and minimize financial risk, you must handle your finances as optimally as possible. 

Risk management is an essential aspect of financial literacy. Understanding risk management allows you to choose the proper steps to anticipate future financial risks.

Also Read: Come on, take a peek! 8 Ways to Pay Off Debt Carefully

Those are the aspects of financial literacy. You can start to learn about financial literacy through the Whiz Money Management App. Come on, let's try it!