7 Financial Literacy Basics Everyone Should Know

Many of us feel unsure & scared when it comes to finances, but it’s never too late to learn & make our finances our best friends. Whether you’re managing the household, balancing your career, or thinking about future goals, financial literacy will help you stay on top of your money and make better decisions for yourselves and your family. It’s empowering to know that with just a little understanding, you can take control of your financial future and build money management skills.

So, let’s break down 7 financial literacy basics that everyone should know. These simple concepts will help you feel more confident managing your money, whether you’re just getting started or looking to build on what you already know.

1. Budgeting: Money Map
A budget is simply a plan for your money. It helps you see where your income is getting spent on. Start budgeting by listing your earnings and expenses. You can follow the golden rule of budgeting i.e. 50:30:20 rule, which will enable you to manage your income effectively.  Here, first 20% should go  towards savings and investing, then 50% of your income goes towards utilities, and 30% towards luxuries.

You can check out Lxme’s Budget Planner which is easy to use & help you effectively budget your income.

2. Emergency Fund: Create Financial Safety Net
Creating an emergency fund is very crucial. As a women we come across various emergencies. So, an emergency fund which is a savings buffer for unexpected expenses like job loss, unwanted pregnancy, sudden separation from partner, etc can secure you financially. Aim to save at least 6 to 8 months’ worth of expenses. This fund provides peace of mind and financial stability.

You can create your emergency fund with LXME Emergency Fund, a tax-efficient fund and you can start with just Rs.100/-. This fund is well-researched and curated by experts.

3. Understanding Debt/Loan: The Good and the Bad
Not all debt is bad. Some debts, like a home loan or education loan, can help you build a better future but if handled responsibly. However, other kind of debts, like high-interest credit card debt, personal loan, etc. can quickly become a problem if not managed properly. Understanding the difference helps you make smarter decisions and avoid financial stress. The key is to borrow responsibly and repay on time to avoid getting trapped in a debt cycle. Ideally, one should save & invest for their goals to avoid any bad debts and increase the burden.

4. Saving vs. Investing: Know the Difference
There’s a preconceived notion that savings and investments are the same, while it’s not the case rather savings is the first step toward investment. When you want to grow your money and create wealth for yourself in order to fulfill your goals and dreams you need to invest and make your money work for you. So, understanding this difference and starting to invest is one of the important thing.

You can start investing with Lxme’s goal and time based portfolios which are well-researched and curated by experts.

5. Child Education: Plan Early for a Your Kids Bright Future

Start saving and investing early for your child’s education to ease future financial pressure as education costs are rising. Consider investing options like equity, debt, gold mutual funds along with few government schemes like sukanya samriddhi yojana if you have girl child, etc, that will grow over time, ensuring you’re prepared for the rising costs of quality education without compromising on other financial goals.

You can check out Lxme’s Child Education Plan which is diversified, well-researched, and curated by experts. If you want to calculate how much you need to invest for your child’s education then check out Lxme’s Child Education Calculator.

6. Insurance: Protecting What Matters Most
Insurance is often overlooked, but it’s one of the important part of a sound financial plan. Whether it’s health insurance or life insurance, it provides protection when the unexpected happens. Having the right insurance can prevent you from dipping into your savings during a crisis, keeping your financial goals on track. Think of it as a shield for you and your family.

7. Retirement Planning: The Sooner, The Better
It’s never too early to start saving for retirement. Check if you’re contributing towards your retirement to ensure you are financially independent and maintain the same standard of living. Even small, consistent contributions can grow significant funds for you over time.

If you want to calculate how much retirement fund you’ll require then check out the  retirement calculator which can help you calculate the same.

If you want to start investing for your retirement you can check out LXME’s Long Term Fund which is well-researched and curated by experts.

Understanding these financial literacy basics can help you take control of your money and make informed decisions for your future. It’s not about becoming a finance expert overnight, but about making small, meaningful changes that add up over time.

You know the best part? You don’t need to understand everything all at once. Start with these basics, and you’ll be well on your way to building a strong financial foundation. Empower yourself by learning, planning, and taking charge of your financial future you’ve got this! This was all about financial literacy for beginners.

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