[The following is a guest post on behalf of Advisor World on the topic of financial literacy.]
How Important Is Your Financial Literacy?
Making informed financial decisions can be difficult. You have monthly bills to pay, and you might wonder where the money is going to come from. Most Americans have no idea how to control their finances. Therefore, it helps to become educated on how to better manage your finances.
What is Financial Literacy?
In order for you to be financial literate, you need to know how to deal with credit (and take advantage of credit card benefits). You should be aware of the process of saving money, and you must know how to budget your finances. You need to have a plan for how you are spending your money.
April Is Financial Literacy Month
President Obama has announced that April is financial literacy month. Financial literacy is the capability to comprehend basic economic provisions and conceptions related to your family or business. The White House wants to help Americans better understand their personal finances, so they are trying to help citizens become financially literate.
Ways To Get Started In Becoming Financially Literate
Read: Find information in books, magazines, and newspapers. Become skilled in the world of finance.
Be willing to make changes: You must be flexible. You cannot expect to spend money frivolously.
Be patient: You cannot become financially literate overnight. It takes time to get a grip on your finances.
Take a class: There are investing and financial planning classes that are offered. Check in your community to see what financial classes that you can take.
Get advice from other people: If you know someone that seems very financial literate, ask for their advice.
Look for help online: There are many online forums where you can discuss financial decisions.
Quit making excuses: Don’t complain about not having enough money. In order to manage your money effectively, you need to change your attitude and be positive.
Study Your Paycheck
Your education and job have a huge impact on your income. Therefore, when receiving your paycheck, you should know the difference between your gross and net earnings. Be aware of what you are actually bringing home.
Plan A Budget
After realizing how much money you are actually making, then you should plan a budget. Keep your checkbook balanced, so you can keep track of your money. Know exactly what you are spending, and set your goals accordingly.
You should not get a loan or borrow money unless you know that you can pay it back. You should not charge unnecessary purchases on your credit card. Interest can really add up, so keep your credit card balances low.
Save Money For Emergencies
You need to also save money each month. Sometimes, you might encounter emergency expenses, and having extra money available will keep you from having to take out a loan or put it on your credit card. Your emergency fund should cover 3 to 6 months of living expenses.
Know Your Credit Score
It is a wise decision to know your credit score. You can get a free copy of your credit report annually. You can keep track of your credit, so you can make sure it is accurate and up to date.
Being financially literate can help you secure the financial future that you deserve. You should make good financial decisions so that you can use your money wisely.
Photo by Salvatore Vuono