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Importance of Digital Financial Literacy

It has not only become easy, but normal to use digital platforms to conduct financial transactions of all kinds. You can make payments and manage assets using a computer or smartphone wherever you are in the world.

Quite frankly, there is no limit to what you can purchase online… if you are connected to the internet.

Internet banking is part of our daily routine, and online shopping is the talk of our generation. Financial literacy has never been so important, and the rise of financial technology (fintech) has added a new dimension to our world, thus it has become a must to have digital financial literacy.

What is Digital Financial Literacy?

Digital financial literacy refers to having the skills and information to manage funds and use financial services via digital devices. This literacy requires you to not only have digital literacy, but basic financial literacy to go with it.

Digital literacy includes the knowledge you’ll have about digital financial products. Such products/services may include e-payments and financial management. They may also involve internet-based insurance and mobile trading.

Investing using robo advisors is significantly on the rise, and quite frankly they have become a solid option in this new world. Learning their benefits early may save you thousands of dollars in fees.

Things like mobile and crypto wallets are all becoming normal conversation, and e-transfers have become the way to trade money with peers. Does anybody under 20 years of age carry cash anymore?

Crowdfunding and Peer-to-Peer (P2P) lending are regular ways to earn and borrow money but require a serious understanding prior to use. Learning their benefits may support your business in ways you may never have imagined.

Learning the benefits and drawbacks of digital financial services has become more essential and will only gain more importance as time goes on. Whether for personal or business, there’s no hiding from digital financial services.

What Risks Should You be Aware of?

Digital financial literacy should include the understanding of digital financial risks and how to control them.

Using digital financial services can expose you to phishing attacks. You can also encounter hacking, SIM card swap, and spyware. Additionally, you can face over-borrowing and high interest when you borrow haphazardly.

Understanding ways to protect your finances can help you avoid digital financial risks. For instance, you can avoid some risks by not sharing your PIN. You can also analyze the set terms and conditions in contracts to avert risks.

Always knowing what kind of digital footprint you are leaving behind can save you in your future. Every action you complete online leaves a trail behind. Whether you’re just surfin the net or you’re posting to your socials, your footprint is growing.

Understanding that this footprint exists is vital and comprehending that any information you provide to these services will be there for a long time. Be careful who you give financial information to, where you shop online, and how you manage things such as credit cards.

Finally, you’ll need to learn your consumer rights. Understanding your consumer rights provides you with control over your data. It also determines how financial firms can use it.

Knowledge of redress procedures allows you to secure your money and personal information quickly. This information will also teach you guidelines to follow if you fall victim to any digital financial risks.

Why You Need Digital Financial Literacy

Digital and financial literacy are essential in this modern era, especially for teens and young adults. Here are three reasons why digital financial literacy is necessary.

1. Investment and savings options are becoming more diverse and complex

Digital finance has created numerous ways in which people can invest or save money. Today, digital finance products are way more complex than in the past. One minor mistake can have a significant impact on your finances. Digital financial literacy helps you make informed decisions, leading to a positive effect on your finances.

2. It helps you avoid fraud and costly blunders

Digital financial literacy provides consumers with a higher level of financial and digital expertise. This way, you can efficiently identify risks such as phishing or password theft. Furthermore, you can take appropriate steps to protect your financial information and funds.

3. It promotes better money management skills

The use of digital consumer services such as remote shopping and online gambling can lead to frivolous spending. However, learning digital financial literacy can help you develop money management skills.

When done right, buying online can also save you money. Buying from reputable vendors, or high-volume sellers like Amazon may save you many dollars compared to your local store. By using the right strategies, you can manage your finances well and create a better future for yourself.

Stay Safe Online

As the dependence on the digital “gig” economy increases, knowing safe financial procedures is essential. Whether for work or leisure, gaining digital financial literacy skills can help you avoid risks and it can also provide you with a hassle-free digital financial experience.    

By: Robert Puharich | January 18, 2022 |

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