Financial literacy 101: How to take control

4 April 2024 | by Alex Cuff

Are you playing catch-up with your finances? You're not alone! In a world where the cost of living keeps climbing, it's easy to feel overwhelmed. But you don’t need to be a financial expert to get a grip on your money. Let’s break down the basics.

Financial literacy is the ability to understand and effectively use various financial skills, categorised by the four fundamental pillars of finance: debt, budgeting, saving, and investing.

But alarmingly, almost three-quarters (73%) of the country fell below the benchmark for financial literacy, and just 5% could answer 10 questions about frequently discussed topics correctly.*

With April marking Financial Literacy Month and Stress Awareness Month – a coincidence, we think not. Taking baby steps to get control of your finances can help tackle both issues. If you know how to manage them, you can often make them go further.

Debt, you’ve been misunderstood

Debt is an amount owed to a person or organisation for borrowed funds that need to be repaid. Whether it's your student loan, credit card, or mortgage, debt often comes with interest, so being hyper-aware of your terms and conditions is essential.

But being in debt isn’t always a bad thing. Effectively managing debt and creating a foolproof strategy for paying off debts in time and in full can be a great way of paying for goods and services in the short term while also working to boost your credit score, which can help when taking out loans and mortgages in the future.

Budgeting, keeping your eyes on the price

Effective budgeting is all about knowing what’s coming in and what’s going out. Simple, right? Keep an eye on your spending habits to see where you could cut some unnecessary expenses too.

Making the most of Kroo’s zero fees abroad or using the simple tools in place for splitting bills with your friends through the Kroo app can help make sure you’re not losing some of your hard-earned cash – and budget for the month – when you don’t need to.

Saving, keeping your eyes on the prize

We all aspire to be great savers, but life happens, and at the end of the month, it can feel like mission impossible sometimes. To ensure you can save, set aside even a small portion of your income as soon as it comes in, rather than waiting to see what is left at the end of the month. Little by little, it adds up – even saving £1 a day can leave you with over £300 set aside at the end of each year!

Kroo Pots come in handy here, giving you a dedicated space to save. You can give each Pot an individual name and use (whether it’s a dream holiday or a dream home), which can help keep you on track.

Investment, making your money grow (potentially)

Unlike savings, where you put your money aside and watch it grow, investing your money gives it the potential to grow through external factors.

Investing, at its core, involves buying an asset and selling it on to make a profit, or ‘capital gain’. This can involve the buying of shares, bonds, commodities or directly linking to property. The price of the assets you buy is affected by market price and goes up or down based on this.

But thinking about investment in individual terms could involve being aware of how to invest in yourself and your future. This could be through the simple act of getting serious about saving or enquiring further about how your organisation is managing your pension, if this is something that applies to you. Or it can even involve whether you should be investing in upskilling yourself to give you the best chance of landing a new role or promotion in the future.

Ultimately, investing can be a powerful tool but is something that shouldn’t be taken lightly without understanding the risks and potential pitfalls involved.

Improving your financial literacy doesn’t have to be stressful. This financial literacy and stress awareness month, take control and start small.

Here are five quick-fire actions you can take to get started today:

  • Setting up a dedicated savings Pot with your Kroo current account and working out how much you can commit to pay in from your income each month
  • Having a subscription service audit – are you really using that streaming service?
  • Signing up for the Money Saving Expert weekly newsletter, which comes crammed with timely tips, tricks and actionable steps to take
  • Creating a spending diary for the week and monitor your outgoings to see where you could make little savings which add up
  • Checking out comparison tables and making sure you’re getting a good deal and a high interest rate on your current account – like you do with Kroo!

Take control and start small. You’ve got this!

To find out more about a wide range of topics relating to financial literacy please check out the below pages:

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