“What does it mean to be financially savvy?”
I would not be surprised if you asked that question. After all, the name of this blog is The Financially Savvy. So, naturally, I should explain what that actually means.
To start, let’s understand the definition of savvy:
From the Oxford Dictionary:
Shrewdness and practical knowledge; the ability to make good judgments. ‘the corporate-finance bankers lacked the necessary political savvy’
[informal] Shrewd and knowledgeable; having common sense and good judgement. ‘Bob is a savvy veteran who knows all the tricks’
[in-combination] Well informed about or experienced in a particular domain. ‘most of us are pretty web-savvy—when an email arrives saying we need to enter our bank details, we don’t click’
synonyms: shrewd, sharp, intelligent, clever, canny, perceptive
Being savvy is about having practical knowledge, being well-informed and making good judgments. Take the example sentence above: “Bob is a savvy veteran who knows all the tricks.” What this means is that Bob, a veteran of some activity or industry, has the experience and know-how to make better decisions than most people. Bob likely reached this skill level through experience, education and some trial and error.
If we change that sentence to say, “Bob is a savvy veteran of personal finance who knows all the tricks,” that would imply that Bob knows a lot about the subject and could be considered an expert or go-to resource for personal finance questions.
The steps to financial savviness
So, how do you become Bob? Unfortunately, becoming Bob takes time. However, you don’t need to be an expert just yet. Expertise will come with time. The important thing to do is start right now. Dedicate yourself to improving your financial health. It doesn’t take an expert to spend less and save more. But where to start?
The first step will be to educate yourself.
Read blogs, newspapers and books. Ask questions and seek advice from trusted resources. That said, be careful not to hit analysis-paralysis, where actions are frozen out of fear that you’ll make the wrong decision.
It doesn’t take an expert to spend less and save more
After all, as in any business, hobby, or life, action is what creates success. Read and study as much as you can, but without action, all that that knowledge will just sit in your head.
The second step is to take action.
Once you take action you will start to see results. Taking action to improve your financial health can consist of many activities: saving, investing, paying down debts, creating (and sticking to) a budget, cancelling wasteful subscriptions, starting a side hustle, etc. The key is action; action that allows you to take control of your finances.
For myself, I find it useful to re-evaluate decisions I have already made to help plan the next actions I will take. Whether that be re-evaluating a budget or investment choices, reviewing past decisions is a great way to learn and make progress.
On some occasions, I find the decision I made could have been better. If that is the case, I learn from it and do better next time. I also find that I made the right decision. When that is the case, I stay the course or look for a way to make that good decision even better.
The theme here? Re-evaluating decisions and learning from them.
The third step is to evaluate your decisions.
The steps to financial savviness:
- Educate yourself
- Take action
- Evaluate your decisions
Step 3, evaluating your decisions, is crucial to long-term financial savviness and health. Step 3 is where you will review the decisions you’ve made and see what you can do to improve. Remember Bob? Bob made sure he never skipped step 3. Step 3 is where you develop that savvy.
I know this sounds simple…
…But that is on purpose. The world of personal finance is complex and confusing at times, but if you continue to educate yourself, take action and evaluate your decisions, you’ll be on the right track.
What are you doing to become more financially savvy?
I’d love to hear from you! Share your ideas, thoughts and opinions in the comments below.