7 Tips to Financial Literacy
Money can be a source of stress, but it doesn’t need to be that way! You should feel empowered when it comes to making decisions about your finances. Here are a few tips to adopt this month—and every month after that—to change your money mindset.
Know your situation
Maybe you’d rather not look at your bank accounts or how much you owe. But the only way to make things better and to take control is to know where to start. Check all of your accounts, including income sources and debt. Make a list, chart, spreadsheet – whatever you need to have all your financial information in one place. Keep it updated and check it often!
Stick to a budget
Following a budget may be hard to do at first because you might need to cut back on certain expenses. That’s okay! Just remember a budget is temporary and Future You will thank you for being so responsible.
Pay bills on time
This goes without saying but using autopay or a reminder on your phone will make sure that you’ve paid all your bills on time. Even a $20 late fee here and there can really add up at the end of the year.
Whether you want to try the snowball method (paying off small amounts first) or the avalanche method (paying off high interest amounts first) is determined by your current financial situation. However, make a payment decision and stick to it! You’ll chip away debt in no time.
Start an emergency fund
Once you’ve paid down debt, you should have a little extra cash flow. Bravo! Now, start stashing that away for your emergency fund. This is exactly what it sounds like – money set aside for an unexpected expense. About 25% of Americans don’t have an emergency fund. Let’s get you there!
Plan for retirement
Depending on your age, retirement may seem distant or right around the corner. Either way, having some sort of retirement plan is essential. Check with your employer, they may have a program that will match a percentage of your contributions! If your employer doesn’t offer a retirement plan, check out an IRA at your financial institution. Keep in mind that an IRA typically has a better interest yield than a traditional savings account (which means more money for you).
Go with the flow
Just like life, your financial situation will go through changes over time. This is totally normal and expected. The trick is to be prepared, educated and have a plan, so that when things do change, you’ll be able to adapt without stressing out.
By educating yourself about responsible money choices—and with a little patience—you can change your money mindset and empower yourself in the process. Practicing financial literacy will get you out of debt, into savings, and breathing easier. Also, if you’re financially fit and able to support local businesses, your community will thrive. It’s a win-win!