Build a Strong Financial Foundation with the 5 Key Pillars
Financial Literacy: Four Key Pillars
Financial literacy is a vital skill that many people wish they had learned earlier. Schlesia Harris, the founder of a company that helps people understand and manage their finances, knows this firsthand. She learned about financial responsibility at a young age when her parents left her in Canada with a credit card and the responsibility of managing her finances. This experience taught her the importance of financial literacy. Harris has identified four key pillars of personal finance that can help anyone manage their money better.
Pillar 1: Debt
Debt can be both good and bad. Harris was taught that all debt was bad, but she learned later that some debt can be an investment in oneself. Harris recommends evaluating debt based on its return on investment and how it will help you grow financially.
Pillar 2: Housing
While owning a home may be a dream for many, renting can be a viable option. Harris stresses that the key to affordable housing is to stay within your budget and be prepared for unexpected expenses.
Pillar 3: Financial Resilience
Having a financial backup plan is crucial when life gets tough. Harris learned this lesson when her car broke down on the highway, and she had to replace the engine. She recommends having adequate insurance coverage and an emergency fund to help you weather unexpected expenses.
Pillar 4: Investing
Investing can be intimidating, but it is a key component of building wealth. Harris wishes she had started investing earlier in her career, and she recommends seeking guidance from financial advisors to help you make informed decisions.
Understanding the 5 Key Pillars of Personal Finances
Realizing the importance of understanding personal finances, Harris took a look back at all their pay stubs and realized they had been investing without even knowing it. They missed out on opportunities to invest more money for over five years and this led them to create the 5 key pillars of personal finances. These include:
. Debt
. Housing
. Financial Resilience
. Investing
. Credit Worthiness
Out of these, credit worthiness is the most crucial as it plays a major role in securing a job, a house, and even affects one's relationship with banks. A good credit score is essential to build financial power and credit worthiness can only be achieved by paying bills on time and maintaining a good credit history. Harris emphasizes that debt is important as it builds credit worthiness and without it, one cannot have financial power.
The 5 key pillars are foundational to personal finances and should be comprehensively taught in schools and institutions to build a generation of young adults with financial confidence. Harris aims to rebuild trust in financial systems, break barriers, and create access for everyone using the pillars of personal finance.