In a world surrounded by money and finances wherever one goes, if we want to become financially independent, we have to become financially literate. Financial literate is a term coined in recent times to represent a group of people who know the basics and terms of everyday finances. The 30s is an age where more or less everybody has a family to look after and in order to be able to do so, you need to become a financially independent person and for that, you need to get familiar with the day to day finances. In the list mentioned below, we have given some must know concepts for you to be familiar in order to become financially independent.
1. Net Worth
Net worth is a measure of your financial health, it’s the sum of the value of your total assets minus the money you owe. You are in a good position if you’re net worth is well in the positives and you’ve got to do a lot of work if your net worth is near the negatives. Net worth is a very popular concept for determining how far you’ve come since you started your professional life.
Inflation is the systematic rise in the price of goods and commodities that happens over time. This means over time as the inflation increases, the value of the same amount of money decreases. It is important to ensure that your pay hike is in sync with the rate of inflation or else you won’t be able to keep up afford luxuries in the long run.
3. Bull Market
A bull market refers to any market which on a rise with stocks soaring near about all-time high. A bull market means that the value of stocks are continuously increasing and the term may even be referred for a healthy economy which is in a good state with a low deficit as well as low rates of unemployment and poverty.
4 Bear Market
A bear market is a total opposite of a bull market. A bear market represents a market which is declining with declining stock prices and an economy in downfall with soaring poverty as well as unemployment. It may seem like a bad thing but as a financially independent person you should know that a market can’t stay down forever, it is bound to go up if it has come down, so for any person who is expected to be responsible it is a time to take steps not in panic but with full mindfulness.
The meaning of interest varies from situation to situation and what it means to you also depends on the situation to situation. Interest can go against you or work for you, it really depends on whether you owe money or have a savings account.
The interest on money owed by you is the extra money you have to pay over a specific period of time in addition to the money you owe to the person or the organization while the interest on savings account means the percentage of the money you receive in your account additional to that already deposited in your savings account.
It is really important to know these financial terms in order to be able to have an independent financial future where you can make your monetary decisions on your own.