Unfortunately for the majority of us, financial literacy is not mandatory as a part of our formal learning curriculum. The implication of this is that far too many individuals lack basic financial literacy. This becomes blatantly obvious only when things begin to go wrong financially. It seems for too long now, budget has been a dirty word. This needs to change otherwise many Australians will perpetually get left behind.

Are Australians good with Money?

Australians in general, are desperately in need of financial literacy – especially in the areas of budgeting, saving and investing, debt management and borrowing.

One of the simplest, yet most effective financial tools available for financial planning and management is a budget. This is simply a tool that helps you plan and keep track of your expected income, as well as your expenses.

In addition, a budget helps you to make better financial decisions since you are deliberately following a plan that dictates how you will allocate your income.

Far few people don’t set a budget, when ideally, every household should establish a realistic family budget that they follow as closely as possible. This is the foundation upon which all financial planning and management should be built.

A budget is just one piece of the puzzle

Saving and investing should be seamlessly integrated into the budget. Most persons will not save unless they make a deliberate decision to deduct a particular percentage of each income source on a regular basis. Automatic savings in the form of salary deduction or automatic debits through the bank are ideal since this prevents you from spending everything without leaving anything for savings.

Once your savings have accumulated to a certain amount, you should begin to invest some of it. Investing is simply putting your money to work on your behalf. There are several investment options available which you should explore with a qualified financial professional.

Australians get a buzz from spending on unnecessary items

Spending within your means is the only way that you will be able to save and invest. Credit card spending should be minimized as much as possible as this is the most expensive form of debt there is. For large purchases such as real estate property, careful consideration should be given to details such as mortgage rates, mortgage terms etc. A 1% difference in interest rate could work out to thousands of dollars and should therefore not be frivolously embraced.

Budget is not a dirty word

If you lack financial literacy, you can take steps to change that immediately as it could mean the difference between financial failure and financial success.

6 ways to stop your money going to heaven – How to combat unnecessary spending.