Every time I see a story about how people got scammed by some investment-related scam the most common and swiftest response is that people need financial literacy. While it is not the only issue you can’t deny that financial literacy or the lack of it plays a part in poor decision making. The solution is of course improving your financial literacy but how do you do this?

Assess your position

The best place to start is to assess where you stand. One of the biggest problems with people who don’t know is that they think they know. So ask yourself where you stand is simply not enough, you will probably score yourself as an intermediate to expert in personal finance. That could be true though highly unlikely. You can take a few tests or look at your finances to see a true reflection of how good you are. The point of this is to assess how much you don’t know because that will give you an idea of where to start.

Read books

Books are a good place to improve your financial literacy. They are wonderful because there are different types of books and approaches to them. Thanks to the breath of the market in personal finance literature you will also benefit from the depth available on specific topics. You can find books specifically on increasing income, saving, investing, real estate, budgeting and so much more. The trouble with books comes twofold. Firstly not all books are created equal, some will ultimately be better than others whilst some will be a complete waste of time. Best to check the reviews if you can. Secondly, how well you understand the book will be informed by how well you understand the subject. It’s very easy for lessons from books to be misinterpreted.

Take a course

It’s normal if not common for personal finance books to come with activities that help you engrain the lessons of the book into your life practically. Courses do that and a little bit more. The tailored nature of courses allows you to understand your circumstances. No need to try to visualise what Arkad or Babylon looked like, you’re working with the real deal. Real circumstances. Of course, you need to be sure the course is worth it.

Manage your content

There’s a limit to how many books and courses you can take. How low that limit depends on you. The fact remains there is a limit. Another great way, which is accessible to most of us is to manage your content and there is roughly no limit to this, except how many waking hours you have. If you have time to watch a video or listen to music then you have lots of time to improve your financial literacy. Maybe you listen to morning radio or read a few online articles. Try this out; watch, read or listen to one piece of personal finance content daily. Just 1. Daily. The trick here is reinforcing the learning you are doing through books and courses daily.

Track your spending

I couldn’t tell you without a lot of effort and pouring through journals how many books, courses, videos, articles and podcasts I’ve consumed on personal finance. I hope to say a lot will suffice to make my point. The best thing I’ve ever done to improve my financial literacy was track my expenditure. See being told by a guru you’ve never met that you should spend not more than 5% on entertainment is one thing but seeing that your 3-month average spends on entertainment is 18% is another world altogether. Tracking your spending puts the personal in personal finance. You can do this with mobile apps in the modern day but all you need is a small A6 pocketbook and a pen or a note-taking app.

Understand and apply

Personal financial management reminds me of exams, at least at the tertiary level. The students who do best in exams are not the brightest, the most knowledgeable, the hardest working or the quickest. The students who do best in exams are those who answer questions best. For many, if not all disciplines this comes down to the application of concepts towards questions and application is best done when you understand. So being all-knowing about personal finance is worth nothing if you are non-practising. Practice, after all, makes perfect. Once you learn a concept make sure you practice it even on a small scale. It will help you encode the concept in your mind forever.

Financial literacy is not a destination but a journey. As you learn more you realise there is more you need to learn. It is about growth and the same lesson handed to two people in different stages of their learning will likely have a different impact. The idea is to keep learning.