Financial Literacy: A Key to Millennial's Aspirations

All of us aspire to create the right amount of wealth and manage our finances in a better way. However, these things seem too complicated when it comes to practice. There is not enough knowledge sharing about the subject – how money works.

In the UAE, financial literacy is an issue and the world in general as well. A recent study says, only 38 per cent of the adults in the UAE are financially literate. If we consider the UAE’s robust position in the global economy, the gap in financial literacy can be allocated to the fact that the country is relatively new. It is urgent to address financial literacy for the millennials, who make up nearly 36 per cent of the UAE’s population. Millennials have emerged as inheritors as one of the most significant intergenerational wealth transfers equal to $17 trillion or 10 per cent of the world’s private wealth.

“A combination of awareness, knowledge, skills, attitude and behaviour necessary to make sound financial decisions and achieve individual financial well-being ultimately,” the Organisation for Economic Cooperation and Development has defined financial literacy.

It’s all about developing functional proficiency in core money skills that are essential in managing our future financial aspirations and needs. Unfortunately, the world’s existing education system enables us to become professionals, and it does not equip us with business management skills, which are essential for managing money for both present and future. There are things which are left to be figured out on our own.

To make ourselves more financially secure and empowered, we need to follow these few things

Set your goals

It is essential to know where you’re going, and setting your financial goals is the first big step if you want to get somewhere. Your saving potential shall be determined by analysing your income and monthly expenses. Everybody has our very own aspirations. The key to setting financial goals is to align our expectations with our money. Once you have placed your goals, it is time to make a budget and stick to it.

Think about passive income

Making passive income means making your money work for you, which is one of the most critical aspects of financial literacy. Your dough should be invested in the right place for it to be able to give you favourable returns. Before investing, you must know your appetite for risk. Mostly, high-risk investments have the potential for higher returns, while lower-risk instruments offer lower but guaranteed returns. A reputed financial planner would be of great help to get your investment portfolio started. You shall start small and build a diversified portfolio gradually over time.

Consider Real Estate

Real estate can prove to be one of the most prudent investments. Everything has ups and downs; in the long run, it almost always pays off. There are two ways in which we can look at real estate as an investment – buying a house or buying an investment asset. When you own your home, you never have to pay rent again. When you buy, it is an asset, and it serves as a great source of passive income.

Investment is an excellent thing in real estate. If there are any plans to purchase a property, the banks will lend you money. Moreover, the rental returns can give you double-digit return on investment over time. When you’re looking forward to investing in real estate, you must consider credible and well-known developers who can guide you in terms of entire process.

Real Estate Accounting

Managing your finances requires determination and discipline. Make sure you are developing the land you’ve funded. To generate more revenue from your asset is your call. Bookkeeping and recording tasks can be very tedious because there are significant numbers of state regulations and countless transactions. It would be best if you manage your real estate accounting books accurately.