What is Financial Literacy?
Financial literacy is your ability to understand and efficiently use various financial skills, including personal financial management, budgeting, and investing. Being financially literate means making informed decisions about your money, from daily spending to long-term savings.
Building a Strong Financial Foundation
Income
Income Income is the money you earn from work, investments, or other sources. Understanding your income is crucial for creating an effective budget and planning for future expenses. With bunq’s Payment Sorter, your incoming payments are automatically sorted into the right bank accounts. You can set up rules to determine splits and easily direct your money where it's needed.
Expenses
Expenses are the costs incurred for goods and services, whether fixed (like rent) or variable (like entertainment). Tracking your expenses is vital for understanding your spending habits. Use bunq’s Budgeting feature for valuable insights and effortless expense monitoring.
Budget
A budget is a financial plan that outlines your income and expenses over a specific period. It helps you manage your money, save for goals, and avoid debt. With Easy Budgeting, you can set up dedicated bank accounts and automatically budget from them.
Need vs. Want
Understanding the difference between needs (essentials like food and rent) and wants (non-essentials like entertainment) is key to effective budgeting.
Credit Card
Credit cards are perfect for making payments online and worldwide. With bunq, everyone gets a free credit card that you can load with funds and start using instantly—without the worry of debt. Since it’s prepaid, there’s no risk of overspending, and no credit checks are required, making it a secure and accessible way to manage your finances.
Saving and Growing Your Money
Short-term Savings
Short-term savings are funds you set aside for immediate or near-future expenses, usually within a year. This can include saving for a vacation, a new phone, or even a new pair of shoes. With bunq, you can create multiple Saving Accounts for each of your short-term goals, earning interest while you save.
Emergency Savings
Emergency savings are essential for unexpected expenses like medical emergencies or car repairs. You can set up dedicated accounts with bunq to make it easy to set aside and access funds specifically for emergencies.
Compound Interest
Compound interest is the interest calculated on your initial principal and on accumulated interest from previous periods. It’s a powerful concept that can significantly grow your savings over time. With bunq, you can earn up to 3.36% interest on your savings with weekly payouts.
Planning for Your Future
Short-term vs. Long-term Goals
Short-term goals are those you aim to achieve within a year, while long-term goals may take several years. bunq allows you to set saving goals for both, helping you plan and save effectively.
Pay Yourself First
"Pay yourself first" means prioritizing savings by setting aside a portion of your income before spending on other things. You can even sort a part of your incoming net salary to a bunq Savings Account. By automatically setting aside a portion of your salary every month, you'll be saving without even thinking about it!
Education and Financial Aid
Scholarships and Grants
Scholarships and grants are types of financial aid that do not need to be repaid. They can significantly reduce your education costs. bunq’s Budgeting tools can help you manage and allocate any funds you receive from scholarships or grants.
Loans
Loans are borrowed sums of money that must be repaid with interest. Student loans are common, and with Future Balance, bunq helps you manage them by predicting your future account balance based on your cash flow and spending habits. This feature lets you anticipate your financial situation and plan your loan repayments more effectively.
Resources for Further Learning
Online Courses and Workshops
Many universities and organizations offer financial literacy courses, as well as emergency funds for students in need. Websites like Coursera and Khan Academy have modules on personal finance.
Financial Apps
Leverage technology to manage your finances. Apps like bunq offer features like automatic budgeting, savings goals, and crystal-clear insights to simplify your financial management.
Books and Podcasts
Expand your financial knowledge by reading books like "You're So Money: Live Rich, Even When You're Not" by Farnoosh Torabi and "Rich Dad Poor Dad" by Robert Kiyosaki and listening to podcasts like "The Dave Ramsey Show” and "The Budgetnista Podcast".
Conclusion
Financial literacy is a crucial skill for you as you transition into independence and adulthood. By understanding key financial concepts and utilizing bunq's modern banking features, you can take control of your finances and make informed decisions. Whether you’re building a strong financial foundation, saving for future goals, or managing credit responsibly, bunq offers the tools you need to create a balanced and sustainable financial future. Stay informed, stay prepared, and watch your financial health flourish.
