Commemorating Financial Literacy Month with Helpful Tips
April kicks off Financial Literacy Month which is dedicated to increasing financial literacy and promoting financial education in our communities and schools. This makes it a wonderful time to review your own finances and examine tips to help ensure you and your family are informed and equipped to effectively manage your money now and in the future.
The Importance of Financial Literacy
First, let’s define the concept. Financial Literacy is the ability to effectively manage, budget and invest your finances. Learning financial literacy and the related skills can save you from economic consequences including amassing too much debt, poor spending habits or a lack of sound budgeting which leads to cash flow issues. This can ultimately lead to credit problems, foreclosures, bankruptcy, or other negative outcomes. Studies show that the earlier people start learning financial literacy, the better they are at managing their finances.
Take the Test: Here’s a quick financial literacy quiz! See how you score: https://www.usfinancialcapability.org/quiz.php
Helpful Tips to Improve Your Finances
Taking the time to learn and practice financial literacy can be an extremely valuable benefit to your household. Let’s look at some helpful tips and financial strategies to improve your personal finances.
- Setting a Budget: Creating and sticking to a monthly budget is an essential way to begin deploying sound financial habits. A budget provides you a snapshot of where your money is going each month so you can make better decisions about your financial allocations. Include all income sources, fixed expenses, variable expenses (entertainment, non-necessities) and savings.
- Savings Strategy: Paying yourself first is the most effective way to begin a savings plan. Set your savings goal, whether saving for an emergency fund, vacation, or down payment on a home, then begin making regular monthly distributions to your designated account. In addition to more immediate goals, commit monthly contributions to your retirement account. With compound interest, long term savings can add up, particularly if you start early.
- Keeping Track of Your Credit: Another key to financial literacy and independence is to take care of your credit. Having a good credit score helps you qualify for the best rates on loans and revolving credit. This is done by making timely payments on your expenses and debts like utilities, loans, mortgages, and credit cards. You can request a free copy of your credit report each year at AnnualCreditReport.com. Look for any inaccurate information (which you’ll need to dispute) and work to remedy any negative issues on your report.
To further explore Financial Literacy, check our Facebook page for periodic tips all month long!
published on 04/01/2022