The average American believes all they need to do is go to work everyday and pay their bills on time. However, being a responsible consumer requires much more. Consumers need to be able to make informed decisions about how to earn, spend and grow their money.
Financial literacy increases the awareness of the benefits and risks of consumer credit and the consequences of poor money management skills. Financial literacy benefits include: accumulating wealth, planning for retirement, planning for children’s college education, starting a business, ability to make large purchases, maintain good credit and achieve financial goals. Financially literate consumers help the banking industry by purchasing products and services which results in stable banks, better customer service, lower fees, and increases in money available for lending.
The primary benefit of financial literacy is providing an improved standard of living for students, individuals and families. Financial literacy helps individuals and families accumulate wealth and live a financially stable life. Families are also able to pass knowledge on to their children and future generations.
- Create a budget or spending plan and track spending daily, weekly or monthly.
- Verify financial statements each month.
- Pay bills on time or before the due date.
- Get current on any late bills by negotiating with creditors or setup payment plans.
- Don't buy something if you don't have the cash to pay for it.
- Avoid using risky options such as payday loans, cash advance or title loans.
- Use credit cards for emergencies only.
- Get overdraft protection to reduce bounced check fees and find banks with little to no monthly fees.
- Order a copy of your credit report and dispute any errors.
- Pay off at least one credit card this year.
- Create an emergency fund to cover bills and monthly expenses for 9-12 months.
- Reduce monthly spending by 30-50%.
- Buy more of items you need instead of items you want.
- Plan for your future by performing estate planning.
- Avoid filing for bankruptcy.