Experts agree that financial literacy is critical. Unfortunately, many people spend a lifetime not fully understanding the importance of saving, budgeting and staying out of debt.
As financial influencer Nischa explained on her YouTube channel, being educated about finance is not the same as financial literacy. She noted that the habits that made the biggest impact on her financial life were actually small ones that compounded over time.
Here are the eight tiny habits she shared to build money know-how.
The first habit to increase financial literacy, according to Nischa, was to match money with priorities.
She said she spent years spending money on things that didn’t really matter to her, including clothes she would never wear, expensive dinners and things she would rarely use. Instead, she noted that “Your money should reflect what you actually care about.”
To help her achieve this, she wrote down her top five priorities and calculated how much she spent on them. Then she looked at where else she was spending her money, and found a “massive disconnect.”
The experts at Ramsey Solutions agree about the importance of prioritization. They noted that it’s important to prioritize what matters and then pour time and attention into those things. They encouraged readers to separate priorities into specific time periods, including daily, weekly and seasonal priorities.
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Next, the financial literacy expert suggested making a monthly money date. She recommended setting aside 30 minutes once a month to review finances.
During the date, she told viewers to review last month’s spending, check any progress made towards financial goals and then set one focus for the next month. She cautioned that the goal or focus should be small and achievable, such as saving an extra $200 or investing an additional 1% for the month.
The YouTuber encouraged her subscribers to embrace automation. She said to automate anything that is recurring, including fixed expenses and subscriptions. According to Rocket Money, automating finances can help to eliminate stress, improve finances and reach financial goals.
The fourth habit to build a stronger financial future was to invest small and early. Nischa explained that investing, even small amounts, is one of the “biggest drivers of long-term wealth.” She encouraged viewers to invest in low-cost index funds that track complete markets.