An Opportune Time to Improve Financial Literacy
1 Apr 2019
A recent survey by GOBankingRates indicates 57 percent of Americans have less than $1000 in savings. Without an adequate buffer of emergency funds, unexpected expenses like car repairs or medical bills can quickly translate into debt.
April is Financial Literacy Month, a perfect excuse to get a jump start on healthier financial habits, such as budgeting, saving and taking general control of one’s finances for the future.
Many of us were taught how to balance a checkbook in high school. But education about how to manage debt, reduce spending or establish a long-range financial plan is less common.
Financial literacy is a life skill that is critical for everyone to learn, particularly those interested in building wealth or owning a home. We’ve compiled some strategies here that can help get you started.
Seven tips for taking control of finances
- Assess your financial situation. Take stock of monthly income as well as regular expenses such as rent/mortgage, utilities, health insurance and groceries. Having a clear picture of your income and spending is an important starting point.
- Open a savings account. Aim to save 10-20 percent of your income. Determine what’s feasible for you and treat this savings like a monthly payment. If you can, automatically transfer money from your checking to savings each pay period. Alternatively, put $5-10 cash per week into an envelope. You’ll be surprised at how quickly it adds up.
- Develop a budget and stick to it. If you’re always overspending, try paying for everything with cash instead of credit or debit cards.
- Figure out ways to cut spending. Are you regularly eating out for lunch or buying specialty coffee drinks? This quickly adds up. Consider splurging once a week or every other week on such treats.
- Make timely payments to avoid late fees and credit dings. Create a personalized calendar to help remind you when utilities, mortgage/rent or credit card payments are due.
- Pay down your debt. If you have credit cards or loans, pay attention to interest rates. Consider transferring credit card balances to cards with zero percent interest periods to cut down on costs.
- Track your credit score and review it regularly. Set specific financial goals for yourself. Whether it’s paying down debt, contributing to retirement or saving for a house, long-term aspirations can help keep you on track for a secure financial future.
Many online resources are available to help boost financial literacy in the form of webinars, worksheets, eBooks and more. Money Management International created a valuable website with tips and a 30-step path to financial wellness. http://www.financialliteracymonth.com/