Financial literacy takeaways
Without an understanding of basic financial concepts, how do you expect to manage your money wisely? The answer is getting educated. Financial literacy is everything because it is one of the greatest challenges people have today. With student loan debt, predatory lenders and a lack of savings for emergency situations, today is the day to change your financial future. Here are 5 kick ass strategies and a bonus 5 financial tools to make a difference today!:
If there is something you do not know about money, ask. If there is a bill you cannot pay, ask. People are afraid to have conversations about their finances but should understand resources are out there and most companies have tools or solutions to get you back on track.
Help the next generation by getting out there and obtaining the financial literacy tools you need. Honestly, how well do you understand money and finances? Resolve to get educated!
There are many ways to get the education you need, and without spending money! Check with your local city/county government to see if there are financial education classes available. Many credit unions offer free seminars on a variety of financial literacy topics. Visit your local branch today.
Know The Difference
The biggest difference between a bank and a credit union is that banks are for-profit organizations and credit unions are not-for-profit. Additionally, banks and credit unions should not be confused with check cashers and other predatory lenders. Know your options.
Do some research on the different types of financial institutions and organizations. You will find those ads that promise “fast, easy loans” are hoping to trap you in a web that could take years trying to get out. Educate yourself on interest rates and learn what the fine print really says.
Just because a short-term lender constantly advertises on TV or the radio does not mean it is the best option. Many credit unions have developed alternatives to payday lenders that help their members by establishing a savings account and educating on financial literacy.
Know You Have A CHOICE
This is the most important aspect of financial literacy. Have the tools, know the difference and then choose appropriately. There is an old saying that rings true today: “A fool and his money are soon parted”. Being educated will lead you to financial success.
Talk To Someone – Kids, Partner, Financial Institution
Important financial topics should be shared, not be a well-kept secret. If you are a parent, talk to your kids about money. If there is something you are not sure about, talk to your partner/spouse. There might be an issue you can work together to find a solution. If one partner controls the finances, both people should be aware of what is happening.
It may not be 1950, but even today you will hear about a husband passing away and the wife having no idea how to manage the household finances. Of course, the same is true the other way around. This is not about gender, it is about being good, financially successful partners together.
A recent study found 72% of parents are reluctant to talk to their kids about money. If this is you, resolve to change for the better!
Set Goals And Plan
Look at finances as you would your family or career; take it seriously. Set goals to save. Be proactive about your financial future. Although money does not buy happiness; it sure does make life a heck of a lot easier. It allows you to do the things you want to do or build the business you want to build. You do not have to be money hungry, but understand your finances and manage it accordingly.
Another great adage by Ben Franklin from the 1700s: “By failing to prepare, you are preparing to fail”. Have a savings plan, create financial goals for yourself and your family.
Kick Ass Bonus: 5 Tools To Improve Your Financial Success!
- Save 15% to 20% of every paycheck. Do this until you build a reserve that will last you three to six months. Ten years ago, this advice would have been a maximum three-month reserve. But with the recent recession taught us it can take much longer to find a job in a crisis situation. Be prepared.
- Track your expenses. This is the most important part of creating a budget. Get a notebook and keep a log. Or put in an Excel file if you prefer. So often people do not know how much they spend, and therefore how much money they have available for discretionary expenses.
- Limit debt to 35% of your income. This way you will be able to save a little while you handle your expenses.
- Use the 30-day rule. Try to limit your spontaneous purchasing. Rather than just deciding to buy a new TV, wait 30 days to make sure it is something you really want (and need).
- Evaluate your bills – and don’t be lazy! Be engaged. Ask questions of your financial institution. Call your cable company and ask to reevaluate your bill before canceling. Most institutions would rather help you than lose you as a customer.