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Barack Obama says “Literacy is the most basic currency of the knowledge economy”. Actually, financial literacy is regarded to be one of the most essential parts of the knowledge economy as only it may lead us to the top of financial stability. In accordance with the National Financial Capability Study (NFCS), just 60 percent of Americans have sufficient knowledge of finance. Overall, the basic essence of financial literacy is the opportunity to utilize your skills, available resources, and connections to make proper decisions and regulate your funds. The researchers of the NFCS identified four main issues that financially literate people should be aware of.
Compound Interest
The compound interest is the percentage that is appended to the principal amount and started to calculate based on the sum of the deposit and the added interest. In other words, if you have deposited $1000 with an annual interest rate of 5%, at the end of the year you will have $1050, and the next year the interest will be calculated based on that amount. The calculations of the simple interest are pretty different from the compound interest. Many of us think that the phenomenon of compound interest in magic, however, be informed, that it may be your greatest enemy when it links to your obligations such as in the case of installment loans. The understanding of the compound interest may help us to make proper financial management and compare the financial products such as bad credit loans or personal loans.
Loan Terms
When you are applying for credit, pay close attention to the set of terms and conditions as they are the key aspect to understand your further actions that must be in accordance with the agreed requirements. For instance, you would like to take a loan and you have to choose between the term of 3 years and 5 years. Definitely, in the case of three years, the monthly payment will be bigger, however, the interest that the traditional lender may probably gain will be smaller. In this case, you should consider the fact of the compound interest as well, because you may lose a great amount of money when the term of the loan is set for a longer period.
Inflation
Inflation is one of the most dangerous issues in the economy. The US government tries to regulate the inflation rate and keep it over 2 percent, as big fluctuations may affect not only the economy of the US but also a great number of countries all over the world. Let’s imagine you have a deposit with an annual interest rate of 5 percent, and the inflation rate for that exact year is 6 percent. Now you have a dilemma, will I gain profit from my deposit or not? The answer is not, because the inflation rate prevails the interest rate of your deposit.
Risk Management
The higher the risk, the bigger the extent of ambiguity and the probability of loss. Risk management is one and the only thing that helps us to eliminate the dangerous losses not only in the sphere of finance but also in our life totally. Before making any kind of financial decision, it should be totally considered and measured. For instance, if you want to take a loan, firstly, you should compare the traditional lenders or payday online direct lenders, secondly, understand the terms and conditions of the credit, calculate your monthly income in accordance with the repayment schedule, etc.
Uncomplicated Solution
In order to escape the all above-mentioned tricks and complicated structures, you may get rid of traditional lenders and concentrate your focus on online payday loans. These kinds of credits are extremely easy to get as they are available fully online. What you need to do is just fill out an online application on our website: Shinyloans.com and get your quick cash in your hands from online trustworthy lenders. Same-day loans are available in a majority of the states and if you intended to get one, you can check it online by looking for payday loans online in Utah (wherever you reside) or by typing payday loans online near me.
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