How to Advance Your Career Through Financial Literacy

The key to achieving financial security and freedom begins with financial literacy. Acquiring the knowledge and developing financial habits to help acquire and maintain financial independence is essential for any career growth. Financial literacy provides a strong foundation for individuals and businesses alike, allowing you to understand value, choose strategies to increase your wealth, and plan for the future. Learning and applying financial literacy skills can result in improved job security, career growth, and even increased earning potential.

Develop a Financial Mindset

The first step to developing financial literacy is changing your attitude and mindset about money. Studies such as the one conducted at the University of Toulouse found that our beliefs about money actually have an impact on our financial success. To adapt a healthier financial mindset and develop a personal finance plan, begin by setting achievable, measurable goals and challenging your personal biases. Start tracking your spending habits, set up an emergency fund, and develop an understanding of investments and economic concepts.

Review Your Credit Report

When looking to advance your career or maintain job security, employers may take a look at your credit. Reviewing your credit can help ensure your credit report is up to date and accurate. You are entitled to one free credit report per year from each of the three credit bureaus, Experian, TransUnion, and Equifax. A Washington State University study found that individuals with higher credit scores tend to have better job prospects and can even command higher salaries. If you find any discrepancies on your credit report, take steps to correct them as soon as possible.

Create a Budget

Creating a budget and sticking to it is an important component of financial literacy. It can help make sure you are staying on track with payments and can help to identify areas where you can save money. The New York University Stern School of Business suggests following the 50/20/30 rule when creating a budget. According to the rule, 50% of your total income should be spent on needs such as housing, utilities, and transportation; 20% should be saved for emergencies or goals such as retirement; and 30% should be spent on wants such as entertainment, hobbies, and dining out. Additionally, use budgeting tools or apps to help you keep an accurate account of your spending.

Utilize Investment Resources

Comprehensive investment resources have been made available to the public through the internet. By utilizing investment resources, individuals can learn more about the market, understand major investment strategies, and place their money in bonds, stocks, ETFs, and other investments. The University of Illinois conducted a study that indicated that individuals who are knowledgeable about investing and personal finance can achieve higher levels of career success and financial success. Make sure to do your research before investing and work with a financial advisor if needed.

Learn About Retirement Plans

When building a strong financial foundation for your career, it’s important to understand how to properly save for retirement. According to the U.S. Securities and Exchange Commission, retirement plans such as 401(k)s, Roth IRAs, and 403(b)s are tax-advantaged plans that can help individuals save for the long-term. Depending on the employer’s plan, contributions to a 401(k) may be matched by a specific percentage, multiplying the effects of setting up a retirement account and improving the chances of a financially secure retirement. Additionally, employer pension plans and government plans such as Social Security can help improve your chances for financial security in your older years.

Conclusion

Financial literacy is essential for any career growth and is the foundation for achieving financial independence. By understanding of the basics of personal finance, creating a budget, reviewing credit reports, investing resources, and learning about retirement plans, you can prepare yourself to meet long-term career and financial goals. Building financial literacy skills can improve job security, increase earning potential, and ultimately ensure financial freedom.

References

University of Toulouse. (2015, October 24). Uncover the secrets of financial success: How beliefs about money and self shape behavior. Retrieved from https://science.sciencemag.org/content/349/6254/1518.1

Washington State University. (2018, April 4). Credit scores may play a role in prospective employee salaries. Retrieved from https://www.wsu.edu/news-releases/2018/04/credit-scores-may-play-a-role-in-who-will-get-a-job/

New York University Stern School of Business. (2020, December 18). Retirement savings: Follow the 50/20/30 rule. Retrieved from https://sten.stern.nyu.edu/advice/career/retirement-savings-follow-the-502030-rule

University of Illinois. (2015, August 5). A verse in financial knowledge: Study finds financial understanding makes retirement more secure. Retrieved from https://news.illinois.edu/blog/view/6367/212682

Securities and Exchange Commission. (2020, March 4). 401(k) plans. Retrieved from https://www.sec.gov/Retirement/401k