Personal finance 101

The more clued up you are on finance basics, the more confident you’ll feel when it comes to making informed financial decisions. But it’s no secret that the topic of financial literacy is often skimmed over both in schools and at home, leaving many of us unprepared to navigate our finances in adulthood.

So, if you’re wondering how to learn about finance, and are looking for insights on budgeting, boosting your credit score, or saving for the future, we’re here to help.

Personal finance guide by Moneyboat

If you’re eager to learn but don’t know where to start, we’ve created an in-depth personal finance 101 guide, filled to the brim with beginner-friendly financial knowledge.

Abandoning confusing jargon, we discuss all the necessary money basics, offering insights that are simple, clear, and helpful. Think of it as everything you ever wanted to know about finance, but were too scared or embarrassed to ask. There’s no long, complicated language, and you don’t need a degree in finance to understand it – our personal finance guide will give you the basics to help put you in control of your money.

So get ready to dive in, and begin the journey of taking control of your finances today.

What is financial literacy?

Financial literacy is the ability to understand and apply financial skills to make informed decisions about money. Strong financial literacy is crucial, allowing us to effectively manage our money and hit savings goals for education, retirement, and home ownership.

However, as mentioned, financial education can be easily overlooked, and it’s not always covered when we’re young – leaving many of us wondering how to best handle our finances. Navigating loans, credit cards, investing, and mortgage applications can feel tricky, especially when we don’t know where to turn for guidance.

Financial literacy for beginners

So, if you’re just starting out on your financial literacy journey, the best thing to do is to take a look at our personal finance guide. But as a starter for ten, we’ve pulled together some quick insights on finance for beginners that you can take a peek at:

1. Saving

Building a savings pot can feel daunting, especially when you’re just starting out. This often happens due to people setting unrealistic goals with tight deadlines. However, instead of putting pressure on yourself to put away huge chunks of money, the key is to establish healthy habits and stick to them – stashing away small amounts monthly.

Establishing healthy savings habits allows you to set aside funds for important life events (such as a wedding or retirement) and it also ensures you’re ready to face unexpected emergencies. The latter is especially important, giving you a safety net to fall back on as well as all-important peace of mind.

When starting out, you’ll need to be specific, setting clear goals and a realistic timeline. We’d also suggest setting up automatic payments to ensure consistency. And remember, your journey might not be linear, but if you stay committed, you’ll hopefully be well on your way to a nice little savings pot. If you’re looking for some more specific tips or an actionable goal, check out our guide on how much you can save in a year!

2. Budgeting

Mastering budgeting is one of the best tools for taking control of your finances. It’s all about effectively balancing your income with your expenses, ensuring your money stretches to cover everything you need.

We’d recommend starting by tracking your monthly income and outgoings, ensuring you understand exactly what you’ve got coming in and out of your account. Next, it’s time to build your budget and set your limits. Many people choose to follow the 50/30/20 budgeting rule – this involves dedicating 50% of your income towards your needs, 30% towards wants, and 20% to savings and debts. This is just a guideline, however, and the percentages can be adjusted to fit your unique situation.

3. Credit scores

Your credit score is an indication of your creditworthiness – in other words, how successfully you’ve managed your money in the past. Your score is influenced by your payment history, including how much credit you’re currently using as well as any late or missed payments – serving as an indicator to lenders of how reliable you are.

A good score can lead to better acceptance rates for things such as credit cards, loans, and rent agreements, also opening doors to more favourable terms. You can get a free credit check from one of the three main credit reference agencies:

• Experian

• Equifax

• TransUnion

If your score needs work, there are a variety of ways in which you can boost it. These involve registering to vote, carrying out regular credit checks to dispute inaccuracies, ensuring payments are made on time, and carefully managing existing debt. While a transformation won’t happen overnight, consistency is bound to lead to positive results. Make sure you check out our guide on how to check your credit score for free so you can keep an eye on your credit file at no cost.

4. Debt

There are two main types of debt: long-term debt and short-term debt. Long-term debt involves bigger investments such as purchasing a home, funding university, or starting a business. Debts such as these are typically repaid over years or even decades.

Alternatively, short-term debt involves borrowing that is repaid over a year or less. This might include payday loans, credit cards, or overdrafts, and it is typically taken out to cover more immediate expenses. You’re also likely to experience higher interest rates and fees with short-term debt.

Failing to repay debt of any kind can lead to serious financial issues. However, by knowing your limits, researching your options, and making sure you’re able to comfortably meet repayment deadlines, you’ll be able to avoid any problems. For an in-depth look at the topic of debt, dive into the ‘managing debt responsibly’ section of our personal finance 101 guide.

How to learn about money

Looking for additional insights on financial education? Head over to the Moneyboat blog for a range of guides on how you can effectively manage your finances.

If you’re hoping to buy a home in the future, our guide on how to save for a house deposit is bound to come in handy. In it we explore the fees associated with buying as well as the importance of setting achievable goals. Or if it’s additional saving tips you’re after, have a read of our guide on simple ways to save money. Our blogs are packed with actionable strategies for helping you boost your savings.

And remember, you can visit Citizens Advice, StepChange, or MoneyHelper for free advice and support should you need it. If you’re ever unsure on a financial decision, there’s always help available.