Financial Literacy Month: Why it matters and 5 tips to take control of your finances

8 April 2025

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In a world where making financial decisions can be overwhelming, brushing up on your financial literacy gives you the knowledge and confidence to take control of your future.

What exactly is Financial Literacy Month and why does it matter?

Financial Literacy Month was created to encourage people to develop better money habits. It’s a time to reflect on your current situation and focus on financial education, helping individuals understand key topics such as budgeting, debt management and retirement planning.

Money affects nearly every aspect of life, from daily expenses to long-term security. Yet, many people feel unprepared when it comes to managing their finances. Studies show that financial and debt-related stress is one of the leading causes of anxiety, impacting mental health, relationships and overall well-being.

By improving your financial literacy, you can:

• Make smarter spending and saving decisions
• Avoid unnecessary debt and financial pitfalls
• Plan for major milestones such as retirement, starting a family or buying a new home
• Become confident in managing your financial future.

Financial literacy isn’t about being perfect with money, it’s about learning how to make better choices over time. If you’re looking for ways to boost your knowledge this month, here are our top five tips.

1. Educate yourself on the basics of budgeting

Before you can improve your finances, you need to understand where your money is going. Start by tracking your spending for a month and once you have a clear picture, set up a plan that aligns with your income and financial goals.

Having a budget helps you keep a handle on the money you spend, but it’s especially important if you find your outgoings outstripping your income. A regular review of expenses should highlight where you can cut costs and whilst essential expenses - like rent, utility bills and food – can’t be sacrificed, you can try to keep them as low as possible. You’ll also find manageable changes – like cutting down on takeaways or online shopping – can have a big impact in the long run.

Tip: Try out budgeting methods such as the 50/30/20 rule – 50% of your income for needs, 30% for wants and 20% for savings or debt repayment.

2. Build an emergency fund

Life is unpredictable and unexpected expenses can derail your plans, especially if you’re not prepared. Having an emergency fund can provide peace of mind and keep you from relying on loans or credit cards in a crisis. Even if you don’t run into trouble, these funds could still count towards your long-term savings.

Tip: Consider opening a savings account. This will protect your money from inflation and having it out of your immediate reach means you won’t be able to dip into these savings on a whim, even if you’re tempted to! Read more on why saving for the future can help.

3. Understand credit and debt management

Not all debt is bad but mismanaging it can lead to financial trouble. The two types of debt you could accumulate are categorised as good debt and bad debt. An investment that could improve your long-term wealth is seen as ‘good’ debt, such as university student loans or mortgages. On the other hand, purchases - such as cars, designer clothing and phones - are bad debt because they will depreciate. Some debt therefore is worth taking on but both types limit your financial freedom. Consequently, you should keep debt to a minimum and work out a payment plan to pay it off as soon as possible.

Tip: If you have multiple debts, consider the avalanche method (a strategy that focuses on paying off high-interest debt first) or the snowball method (paying off the smallest debt for quick wins and to gain momentum).

4. Start investing early

Investing is a powerful tool for building wealth, but it can be intimidating if you’re not familiar with the basics. Start by reading about different investment options such as stocks, bonds and mutual funds. Also knowing the difference between high-risk and low-risk investments is crucial before you start investing.

Consider meeting with a financial adviser to help you navigate the best investment strategy based on your personal financial goals and risk tolerance. Getting expert advice early can give you confidence as you start your investing journey.

Tip: Whether you’re new to investing or someone with more experience, investing can be a complex and tricky topic. Understanding how to invest is key but so is being aware of the most common mistakes you should avoid. Check out our top 10 tips to help you steer clear of the most frequent investment pitfalls.

5. Learn about retirement planning

It’s never too early to start planning for retirement. The sooner you start saving for the future, the more time your money has to grow. Familiarise yourself with retirement options like personal retirement investments or workplace pensions and understand how compound interest can work in your favour.

Starting early and being disciplined to save are key. Even if you start with small contributions, it will have many years to grow. And remember when you get a pay rise to set aside some of the increase in your pension pot.

Tip: If your employer offers a pension scheme, consider contributing a portion of your salary to it. Even small contributions can strongly add up over time, especially with employer matches.

Financial knowledge is a critical life skill and it’s never too late to start learning. Whether you’re just getting started or looking to enhance your current knowledge, taking steps to improve your money management skills can have a lasting impact on your financial wellbeing.