Most people are financially illiterate

While this is one topic that never gets old and is always of utmost importance to people, it’s not directly thought in schools, which ultimately creates generations that are unprepared and inefficient when it comes to their finances.

The system creates literate people, who are financially illiterate.

How to get richer than 99% of your peers

There are a lot of procedures to describe and a lot of techniques that financial advisors recommend.

You can also probably find books, articles and other blog posts about this, enough to last you for years of reading.

However, there are 2 problems with the financial advice these days:

• it’s harder to navigate through the commission savvy advisors and employees that just want to convince you in the direction that’s profitable for them
• - The general good advice is generally explained in an overly complex manner, too complicated for the average Joe or the old-school, cash holding relatives

First of all, I would like to clarify that I am not a financial advisor, nor I’ve ever been. I am a Software Engineer that wanted to improve his finances.

Next, I’ll break down what a few hundred articles, hours of YouTube videos and few books made me realize. And I’ll do my best to explain it in a way that’s easily understandable for everyone, like I wanted it when researching.

The 5 tips to improve your finances

Practice mindful spending

The first thing everyone should do with their finances is to start being aware of the flow of money into their lives.

Don’t panic and start cutting out your coffees, or lock yourself in your house for a week to reduce spending.

Try to have a normal week, maybe even go a bit extra, have that coffee if you want, get the croissant you were craving, order in on Friday night.

Don’t exaggerate, but don’t hold back either!

You want to see how much you are spending on average in a week, but also to live comfortably, whatever that means for you.

For some it might mean a non-disputable massage every Sunday, or a non-debatable Squash game, or an every day artisan coffee at your favorite café.

We still want you to be happy, that’s the ultimate goal.

Now, break down what you spent your money on, and see how you are doing.

Most of the bank applications have a way of describing your spending into multiple categories.