Financial planning has three parts and just like planning you cannot start financial literacy with tactics. Here’s why.
Tactics are tools. Knowing a great deal about credit cards is good but not good enough. Knowing a lot about all of the tools is even better but again no joy.
There are too many and the nuance matters. Life and property insurance. Debt of all kinds. Hundreds of investments. Taxes. Agreements, wills, powers of attorney, employee benefits, pensions. Worse they are tightly connected to the world and that connection changes. So do you.
People think tools are financial literacy. That is like someone who knows about tools and decides they could build a house. Knowing about hammers and saws and nails and lumber is not even a beginning.
Strategic literacy matters more.
What should I do? In what order? Who can help me? What resources do I have? What skills are missing. What conflicts?
People who can own tools do not by magic know how to use them. Using is the test. Only a user can tell if it works and if they have solved a problem they understand. If they don’t know the problem and situation, how can they select the right tool? So strategy first.
Then you must implement. Literacy includes knowing your limits. Most tools cannot implement without some professional help. Money is a limit. Things that matter should not be completed by amateurs.
The world pays lip service to financial literacy and talks about tools. The easiest and least useful place to start. Finance matters so you will be forced to fill in the blanks by yourself. Maybe with helpers who don’t start with tools.
At a minimum know in general where money comes from, how you earn it, why it comes in the amount it does, what you can change to get more, how taxes work, how you transfer money to the future, how debt works.
If you do not develop a strategy, you cannot win this game. No tool makes sense in isolation.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772