According to Investopedia.com, “Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting and investing. It is the foundation of your relationship with money, and a lifelong journey of learning.”
My husband’s Nana used to remind him repeatedly when he was a kid to make sure he always saved enough money to put some in the bank and never spend all of it. Her philosophy transferred to today, where at age 45, he analyzes every purchase. At times, it makes me crazy! However, in the long run, I think we will find it beneficial. Because we budget our money and try to spend on what is the most important to us as a family, I feel more comfortable that by saving now, we can put our two children through college and not have them come out with significant loans. We can afford to retire in a way that we enjoy our retirement years! I hope our attitude towards money will then translate to our children as they grow up and become responsible adults.
Some things you can do in your life to become more financially literate include:
Create a Budget: How much do you make each month versus how much you spend? You can easily break your budget down into the 50/20/30 rule: 50% for needs, 20% for savings & 30% for wants. There are several apps you can use to make it easier on yourself, such as PocketGuard, Mint or Honeydue. Here’s a great article that reviews these apps as well as others: www.nerdwallet.com/article/finance/best-budget-apps
Pay Bills on Time: Not having to pay late or overdue fees will save you money and give you less to worry about! If you pay your bills online, you can set up automatic transfers from your checking account on a specific day each month for recurring bills. You can also set up payment reminders by e-mail or text.
Check your Credit Score: When you have a good credit score, you can obtain the best interest rates on loans and credit cards. You can monitor your score with a free credit monitoring service or request a free credit report from Experian, Equifax or TransUnion through www.AnnualCreditReport.com.
Protect Yourself Against Identity Theft: In today’s world of technology, identity theft can threaten your personal safety as well as your finances. How often do you change your passwords? A password manager can help you generate unique passwords while also securely storing the login information you use for apps on your cell phone or websites on your desktop. If you need help getting started, this website lists the best password managers for 2021: www.cnet.com/tech/services-and-software/best-password-manager/
The U.S. Treasury-sponsored website, mymoney.gov, provides lesson plans for teachers, games and fun facts for kids and tips and resources on how to handle different life events. We can also help you continue your financial literacy journey! Call us anytime at (301) 733-7777 for help on retirement planning, education, your estate, etc.