What Does Financial Literacy Mean To You?
Money, money, money… We all think about it many times a week – sometimes many times a day! With money being a “must have” to get along in the world that makes sense. The next question is: How do you rate yourself when it comes to financial literacy?
If you don’t know what financial literacy means, then please keep reading. Here is the question in another form.
How confident are you that you know what is important to do with the money you earn? Do you know how to make the most of your money and make sure you are financially stable now and in the future?
Here is one look at what it means to be financially capable…
Financial capability, unlike financial education, is not learned solely in a classroom. It needs to be developed over time and made available during key decision-making moments throughout a person’s life, such as when they leave home for the first time, buy a house or rent an apartment, get a new job, have a child or pay taxes. And to ensure maximum impact, trusted financial advice and products need to be embedded in trusted institutions, such as schools, workplaces, and community centers…
…As people enter adulthood, targeted financial capability strategies can have a huge impact on long-term financial security, particularly when it comes to choosing where to live and how to pay for it.
The path towards homeownership offers multiple opportunities to put good financial products and advice in front of people trying to decide which home they can afford, what mortgage to choose and how to cover maintenance costs for their most important asset. Pre-purchase housing counseling, for instance, has been found to significantly reduce foreclosure and delinquency rates. – Huffington Post
Help To Refresh Your Financial Literacy
You may be asking, “Where do I begin?”
Here are a few points to consider as you brush up on your financial know how!
Identify your Starting Point
If you don’t know where you are financially, it can be challenging to plan for where you want to be next year, five years from now or decades down the road in retirement. That’s why it is important to identify your starting point.
Calculating your net worth is the best way to gauge both your current financial health and your progress over time. Net worth is the amount by which assets exceed liabilities and can provide a wake-up call if you are off track – or confirmation that you are doing well…
…Set Your Priorities
Creating a list of needs and wants can help you set financial priorities. Needs are things you must have in order to survive: food, shelter, clothing, healthcare and transportation. Wants, on the other hand, are things you would like to have, but aren’t necessary for survival. Many people get into financial trouble by spending too much on wants and don’t have enough left over for their needs.
Knowing the difference between the two, and being mindful of the distinction when making spending choices, goes a long way when it comes to your financial wellness. You’ll need to rank your needs as well as your wants in order to clearly define where your money should go first…
…Document Your Spending
Most people could tell you how much money they make in a year. Fewer could state how much money they spend, however, and fewer still could explain how and where they spend it. One of the best ways to figure out your cash flow – what comes in and what goes out – is to create a budget, or a personal spending plan.
A budget forces you to put down on paper all of your income and expenses, and this can be an indispensable tool for helping you meet financial obligations now and in the future…
…Pay Down Your Debt
Most people have debt – mortgage and auto loans, credit cards, medical bills, student loans and the like. What makes living with debt so costly is not just the interest and fees, but because it can prevent people from ever “getting ahead” with their financial goals. It can also be an emotional drain on individuals and families. – Investopedia
Will you make a commitment to yourself to increase your financial literacy starting now?