What are the 4 rules of being financially literate?

It’s tough to put rules around money that apply to everybody the same way. After all, everyone lives different lives and uses money in different ways. But if we had to narrow it down to just a handful, these are what we’d pick:

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1. Budget to organise your money. 

Some people - okay, a lot of people - say that budgets aren’t fun. We reckon they’re just thinking about them the wrong way. Budgets aren’t about saying “no”, they’re about saying “yes!”

• Yes, all of the most important parts of your life will be covered by what you’re earning.
• Yes, you know exactly how much wiggle room you have for treats and fun stuff with the kids.
• Yes, you can give yourself the mental space to stop worrying about rent or repayments or keeping the food cupboard full. Your budget already says you’re covered!

Financial literacy isn’t just about understanding how money works. It’s about being able to apply those skills to make your life better. Budgets are a tool that gives you peace of mind - and that’s priceless.

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2. Tune your financial goals. 

Financial goals change over the course of a lifetime. Saving up for a first car, making a deposit on your first flat, squirrelling away enough for a home, going on that dream holiday, sending the kids to university, retiring when you want to (maybe even early) - you get the picture.

Part of financial literacy is being able to flex with your changing priorities. Money makes life happen, so being able to tune your financial goals to fit your changing circumstances - changing their timing, scope, or the way that you get to them - is a clear sign you know how to make the dollars make sense.

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3. Pay your bills on time. 

We know, this is a dead simple one - but like we said, these are rules that apply to everybody! Everyone will have bills of some kind, like phone bills, credit card bills, subscriptions and utilities. Unless someone has cut themselves completely off from the modern world, they’re going to need to pay someone.

Making regular, consistent bill payments - and knowing what to do if you’re not going to be able to - is a basic but super important part of excellent money management. This rule stops downward money spirals in their tracks and can be a good idea to follow no matter where you’re at financially.

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4. Save some money.

Whether it’s a little or a lot, people who have mastered financial literacy know the power of saving money.

• Emergency funds ensure that you’re covered when “life happens” and that a carefully crafted budget can’t cover the extra costs.
• Bonus savers and term deposits use your money to make more money safely, slowly growing your wealth over time.
• Dedicated savings accounts for specific goals mean you aren’t tempted to go into unnecessary debt to pay for the things that make life awesome.

Not everyone is in a position to save heaps of money all the time, but even a small, regular, automatic amount of money going into your savings builds up over time. Follow the rule of saving something, and you know you’ll always have a chunk of change to fall back on.

As a famous fictional pirate once said, these aren’t really rules. They’re more like guidelines. You must remember that money is mahi, and the mahi is on your shoulders. You can get guidance and advice, but the real work of using your money to make you and your family’s life is in your hands. 

So - what rules do you follow to stay financially literate?

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This was originally posted as an education article on the Money Sweetspot customer portal. If you read this as one of our customers, you would've earned some money off your loan! Do the mahi, get the treats. Find out more.

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