Today employees have a greater need to educate themselves about how to effectively manage their finances because many employers are eliminating retirement plans and offering 401K’s. In addition, financial products and services are more complex and perplexing. April is Financial Literacy Month which stresses the importance of financial literacy.
Without adequate knowledge about basic financial literacy concepts, consumers can make devastating mistakes that can take years to recover from. Regularly practicing good money management habits eliminate the needs for dependency on credit cards, payday loans or title loans and cash advances.
The financial stability of families is directly linked to economic growth in America. The economy is stronger when more Americans have jobs, increases in income and an accumulation of wealth.
Financially strong families tend to have better money management skills and are more willing to make major purchases that help advance our economy. Financially successful people save more and are more able to get approval for credit cards and loans.
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.
This is where the importance of financial literacy plays a key role. The lack of financial literacy education and effective money management skills result in mounds of debt, low credit scores, denial for approval of credit and loans, increased foreclosures and bankruptcies. These factors ultimately slow economic growth.
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.
This month make at least one change to your spending habits to help pay down debt, create a savings account or start planning for your retirement. Make a promise to yourself and your family that starting in April you will do at least one of the following to improve your financial life.
1. Create a budget or spending plan and track spending daily, weekly or monthly.
2. Verify bank statements each month.
3. Pay bills on time or before the due date.
4. Get current on any late bills by negotiating with creditors or setup payment plans.
5. Don't buy something if you don't have the cash to pay for it.
6. Use credit cards for emergencies only.
7. Get overdraft protection to reduce bounced check fees.
8. Avoid filing for bankruptcy.
9. Order a copy of your credit report and dispute any errors,
10. Pay off at least one credit card this year.
11. Create an emergency fund to cover bills and monthly expenses for 9-12 months.
12. Reduce monthly spending by 30-50% by using coupons, buying items on sale, in bulk or shopping at discount, wholesale or outlet stores, etc.
13. Buy more of items you need instead of items you want.
14. Plan for your future by doing performing estate planning.
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