The first step to gaining financial literacy is learning how to budget. When you have a budget plan, you can spend money accordingly and will be able to save any extra to use later in case of an emergency. Without a budget plan, you will be unable to control your spending and, as a result of this overspending, may suffer if your salary or allowance ends. In order to make a budget plan, you first need to note your monthly income and, second, track your spending. You need to include all your fixed expenses like your mortgage or rent, utility bills, loan payments, etc., and then include variable expenses such as groceries, entertainment, etc. 

When someone pays off their credit bills on time, they are viewed as trustworthy by the lender. They begin to build a credit history and are afforded an improved credit score that will help them obtain future loans. In the US, a credit score is a three-digit number from 300 to 850. A high score indicates someone who is low risk financially and repays their credit bills on time, while a low score indicates a credit risk and who has likely not previously paid their credit bills on time. You should also be aware of your credit report, which is a summary of your financial situation. 

It is important to understand the importance of paying off your debt and loans. Having a debt-free life is a desirable dream for most individuals. There are two ways to pay off your debt fast. One way is to identify the loan with the highest interest rate and pay this off first, hence reducing the amount of interest you will need to pay in the long term. Once this debt is cleared, you can then focus on paying off the loan with the second-highest interest rate, and so on. An alternative approach is to pay off all small debts first and then focus on the larger loans.