Whether you’re renting your first apartment, trying to build credit history, repaying student loans, buying a new home, starting to plan for retirement, or maybe not even thinking about these things, financial literacy matters. No matter what stage of life you are in, financial literacy is critical to have.
By definition, financial literacy – or financial knowledge – is having the skill set and knowledge to make informed decisions about money. Since money management is not often taught in formal classroom curriculums, it is up to individuals to learn about and effectively practice skills like money management, budgeting, and investing. The earlier you start, the better – but "better late than never” certainly rings true when it comes to informing yourself and implementing changes that will help you achieve monetary success. The good news is that whenever you decide to enhance your financial literacy, our team of top registered investment advisors at Triumph Capital Management are here to help.
Components of Financial Literacy – Credit & Debt
One of the most important components of financial literacy is understanding the ways that credit and debt can work for and against you. Debt, when used correctly, can actually be useful. However, when used incorrectly, debt can easily incapacitate a person’s financial future. Missing payments can negatively affect your credit score, which can then take years to recover from. Having a strong credit score is essential to maintaining a secure financial standing.
Components of Financial Literacy – Interest
Similarly, interest is a tool that works for or against you, and once again a comprehensive understanding of how it works is key. Taking out a loan with a high interest rate is a prime example of how interest can work against you. Conversely, interest can work in your favor when you make investments early on in life and capitalize on compound interest. Compound – or compounding – interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Interest may be compounded on any frequency schedule, such as continuous, daily, or annually. The number of compounding periods will have a significant effect on the calculation of compound interest. If you are looking for an experienced financial advisor in the Denver area to help you maximize interest as you invest, reach out to our team today.
Components of Financial Literacy – The Value of Money
Another key element to developing your financial knowledge is understanding the time value of money. Since money can earn compound interest, it is essentially more valuable in the present than in the future. By saving and investing money early on, you can use the value of time to your advantage. As a top registered investment advisor, our main goal is to help you plan for every aspect of your financial life. We’re passionate about helping our clients maintain and grow their financial literacy throughout the long-term investment process.
Components of Financial Literacy – Inflation
Inflation is also a vital component to understand when it comes to financial literacy and the importance of investing early and regularly. Inflation is an upward movement in the average level of prices. With a continual rise in the general level of prices for goods, a unit of currency effectively buys less in the future than it did in the past. So, while it may be tempting to stash cash away, doing so will literally cost you money. For instance, if the rate of inflation is a hypothetical 2%, each dollar you set aside without investing will shrink in value to $0.98 by next year. Our team is here to help. Connecting with a trusted fiduciary advisor is a step in the right direction to ensure you are as protected as possible from the negative effects of inflation.
Components of Financial Literacy – Financial Fraud
Finally, financial literacy is necessary to help protect you from becoming a victim of financial fraud. As more customers move to managing their money online, financial fraud is unfortunately becoming more common. A stolen password or Social Security number can wreak havoc on your current and future finances. As such, it’s imperative to take precautions to protect your personal information. Using a password manager is one way to protect your money, as it will ensure you are following the advice of using a strong, unique password for each site and service that you utilize.
Financial Literacy Strategies
Once you have a comprehensive understanding of the key components of financial literacy, it’s all about practicing good money management skills like creating a budget to track how much you earn and spend. If you don’t know what your credit is like, request a free credit report from Experion, Equifax, or TransUnion. Review the findings and dispute any errors. Having a strong credit score will help you to obtain the best interest rates on loans and credit cards.
Investing in your future and creating a diversified portfolio with a trusted financial representative is one of the most valuable ways to establish, maintain, and prolong the efficacy of your financial foundation. At Triumph Capital Management, our clients always come first. We are here to answer any questions you have about investing and financial planning. We pride ourselves in providing active portfolio management focused on your individual financial goals and strive to deliver long-term results. As a fiduciary, we consider it an honor and a privilege to help our clients work towards making sound investment decisions that will contribute toward a better future. We provide impeccable client service to help grow your portfolio and preserve assets by utilizing numerous investment products and strategies. When you do well, we do well.
Triumph Capital Management
1610 Wynkoop Street Suite 550
Denver, CO 80202
Advisory services offered through Triumph Capital Management, a registered investment advisor SEC#282814. Insurance Services offered through Triumph Capital, LLC #619821