Meta description: Read Wonga’s five pieces of advice to combat a lack of financial readiness and to prepare for the future. This crash course will improve your financial knowledge in just five minutes.
It has long been argued that most countries do not provide enough education on how to manage your finances, especially at a young age. Forbes has called it out on a global scale, and stated that young adults “know little beyond a transitional bank account”
That’s why financial companies have been proactive in providing excellent information on how to become more financially aware and ready. Here are five tips previously discussed by the reputable loan provider, Wonga, that can enhance personal financial readiness.
- Develop a Monthly Budget
Everyone should have a monthly budget to monitor their spending and start a savings pile (more on that later). But one of the biggest mistakes people make who already have a budget is that they don’t update it to see if they really do stick to it, or they don’t update it in line with life’s changes, such as changes in income or rent.
- Pay off Debts (with the Snowball method?)
At the end of last year, and notably before the pandemic, Reuters reported that USA household debt was increased by $193 billion in the fourth quarter. Rises in personal debt is a concern across the globe. If you are one of those people in debt, Wonga recommends making a realistic plan to paying it off – instead of avoiding the issue.
One of the effective ways for people with multiple debts is the snowball method. This is a well-known technique that can be valuable to many debtors. It works by making minimum payments on all debt and paying any extra disposable income to one of the debts repeatedly until it is paid off (and then moving to another one of the debts).
- The 52-Week Saving Challenge
The 52-week saving challenge is an attempt to increase personal savings which is also shockingly low across the younger generations. By committing to saving a certain amount each week for a full year, it is hoped that it will change attitudes to spending and show individuals what can be achieved. Ultimately, it should begin a lifelong habit.
- Grow or Start Your Emergency Fund
Nobody could have predicted COVID and what it would do to jobs. That’s why so many people were not financially prepared for when their income dropped. Having an emergency fund has proven to be so beneficial. And even if a pandemic doesn’t come around again in your lifetime, there may be other times when you need a financial cushion to fall back on.
Make sure any savings you make are accessible. Some of the best savings accounts lock your money away for a year or longer, and that is not suitable for an emergency fund.
- Become Fraud Smart
Lastly, be aware that companies are using the remote working culture and financial worries to attempt more phishing scams. Be aware of attempts to steal your data online through fake websites, fake online stores and phishing emails that don’t address you correctly and ask you to click links.