Financial Literacy

•Financial literacy is the ability to understand and effectively use various financial skills,
including personal financial management, budgeting, and investing.
•Financial literacy is the foundation of your relationship with money, and it is a lifelong
journey of learning.

Reality check:
Simple Rules in Financial Freedom
1. Pay yourself first. YOU is your first source of Capital.
Redefining Savings- It must be defined as an Expense.
It is an expense that BUYS your FUTURE.
Equation:
Income Income
- Savings or - Consumption
Consumption Savings

Rule 3: Stop spending on things that diminish in value know the difference between
Assets and Liabilities
Poor Spending Habits
•Impulse buying
•Trend
•Too much entertainment

Rule 4: Protect your greatest Income Generating Asset, Yourself

•Health is Wealth
Rule 5: Assess Risk & Option
The higher the risk, the higher the return. Always investigate 1 st before believing.

When do banks or lenders lend?

● Banks- The ability of the borrower to prove that he will use the proceeds of the
loan in an activity that will produce sufficient income to repay the loan
● The borrower has more than enough sustainable income to pay for the loan plus
interest;
● The lender does not mind foreclosing on or taking over the collateral

Rule 6: Make money work for you: the power of leverage

● Borrowing- leverage in finance (Analysing Good Debt)
● People Leverage
1.Promoting our Blog Posts
2.Guest Blogging
3.Releasing an API
4.Adding Value for our customers through other people’s work.
5.Participating in Events

Credit Card
● Allows cardholders to borrow funds with which to pay for goods and services with
merchants that accept cards for payment.
● Credit cards impose the condition that cardholders pay back the borrowed
money, plus any applicable interest, as well as any additional agreed-upon
charges, either in full by the billing date or over time.
● The credit card issuer may also grant a separate cash line of credit (LOC) to
cardholders, enabling them to borrow money in the form of cash advances that
can be accessed through bank tellers, ATMs or credit card convenience checks.
● Credit card company gives you a credit limit you can make purchases against.
This limit is based on things like your credit score, income, and account history.
 ● Secured credit cards are a type of credit card where the cardholder secures the
card with a security deposit.
● Debit Card is a type of secured payment card, where the available funds match
the money someone already has parked in a linked bank account.

Reading Your Credit Card Statement:

Each month, you’ll receive a statement showing your account activity. This statement
includes:
● Your total card balance
● Your available credit limit
● Purchase you made during that billing statement cycle
● Minimum payment due
● Payment due date

How to use credit card

● You may be prompted to insert your card in a chip reader or swipe it at the
checkout.
● You can also add your card to digital wallet apps for contactless payments in
stores.
● When shopping online, using your credit card is a matter of entering your card
information including:
➔ Your card number
➔ The expiration date
➔ Your card’s CVV security code, which is typically printed on the back
It's also important to use your credit card in ways that will help boost your credit
score, while not costing you more than necessary in terms of interest and fees.
For example:
1. Pay your bill on time
2. Know how your card’s interest calculated
3. Watch out for credit card fees
Some of the most common fees you may encounter are:
● Annual fees
● Foreign transaction fees
● Balance transfer fees
● Cash advance fees
● Late payment fees
● Returned payment fees
4. Keep an Eye on your Balance.

Identity Theft
● The crime of obtaining the personal or financial information of another person to
use their identity to commit fraud, such as making unauthorized transactions or
purchases.
● Identity theft is committed in many different ways and its victims are typically left
to their credit, finances, and reputation.
● Identity theft occurs when someone steals your personal information such as
your Social security number, bank account number, and credit card information.
● Identity thieves increasingly use computer technology to obtain other people’s
personal information for identity fraud.

Types of Identity Theft

1. Financial Identity theft- someone uses another person’s identity or information to
obtain credit, goods, services or benefits.
2. Social Security identity theft- they can use it to apply for credit cards and loans
and then you not pay outstanding balances.
3. Medical Identity theft- someone poses ad another person to obtain free medical
care.
4. Synthetic identity theft- type of fraud in which a criminal combines real and fake
information to create a new identity, which is used to open fraudulent accounts
and make fraudulent purchase.
5. Tax identity theft- occurs when someone uses your personal information,
including your Social security number, to file a bogus state or federal tax return in
your name and collect a refund.
 6. Criminal identity theft- a criminal poses as another person during an arrest to try
to avoid a summons, prevent the discovery of a warrant issued in their name, or
avoid an arrest or conviction record.

Savings
● Saving refers to the money that a person has left over after they subtract out their
consumer spending from their disposable income over a time period.
Type of Savings Accounts
● Saving Accounts pays interest on cash not needed for daily expenses but
available for an emergency.
● Checking Accounts offers the ability to write checks or use debit cards that draw
from your account.
● Money market accounts is an interest-bearing account at a bank or credit union.
● Certificate of Deposit limits access to cash for a certain period in exchange for a
higher interest rate.

Investment
● An investment is an asset or item acquired with the goal of generating income or
appreciation.
● An investment requires putting capital to work, in the form of time, money, effort,
etc., in hopes of a greater payoff in the future than what was originally put in.
● An investment can refer to any medium or mechanism used for generating future
income, including bonds, stocks, real estate property, or a business, among other
examples.
How an Investment Works?
● The act of investing has the goal of generating income and increasing value over
time.
● Investing is oriented toward the potential for future growth or income, there is
always a certain level of risk associated with an investment.

Type of Investments
● Economic Investments
Within a country or a nation, economic growth is related to investments. When
companies and other entities engage in sound business investment practices, it
typically results in economic growth.
● Investment Bank
An investment bank provides a variety of services to individuals and businesses,
including many services that are designed to assist individuals and businesses in
the process of increasing their wealth.
Saving VS Investing
● People sometimes use the words savings and investing interchangeably, for
instance saving for retirement in a 401(k) plan, but this usage is technically
incorrect. Retirement "saving" is more accurately investing, since money put
away in these accounts is used to purchase securities such as stocks, bonds,
and mutual funds.

Loan
It refers to a type of credit vehicle in which a sum of money is lent to another party in
exchange for future repayment of the value or principal amount.
The lender—usually a corporation, financial institution, or government—advances a
sum of money to the borrower.

Types of Loans
Secured vs Unsecured Loan
Mortgages and car loans are secured loans, as they are both backed or secured by
collateral.
Credit Cards and signature loans are unsecured loans.
Revolving vs Term Loan
A revolving loan can be spent, repaid, and spent again, while a term loan refers to a
loan paid off in equal monthly instalments over a set period.

Effect of Debts
● Bad debt can cause stress
● Your credit score
● Holding multiple jobs
● Saving for retirement
● Making Large purchases