Financial Literacy Month [2022]

Key Takeaways:

• April is financial literacy month and it is the best time to spring clean your finances.

• Developing respect for money will help you gain control over your finances.

• The keys to creating wealth are to make more, spend less, and invest.
  

April is financial literacy month. It is designated to bring awareness and education surrounding money and how to make it work for you.

What Is Financial Literacy?

Financial literacy is the ability to understand and effectively apply basic financial skills. The ability to understand your finances leads to a positive impact on your financial future.

 

Oftentimes, we are unaware of the financial consequences that come with overspending and having little to no emergency savings. The lack thereof creates a whirlwind of debt.

 

Money management skills are skills that you can learn and apply for a lifetime.

 

Resolution 316 was passed by congress on April 1, 2004. Each year, many entities observe financial literacy month to raise awareness of the importance of financial literacy.

 

Recommended Read: 5 Ways To Manage Your Money That No One Ever Talks About

 

How Can Financial Literacy Help You?

Financial literacy can help you become self-sufficient and achieve financial stability. With the proper education, you can maximize the value of your income. This will help you achieve more short- and long-term financial goals.

 

With the right financial foundation, you can have much financial success. The foundation is what holds everything together. Without it, everything falls apart.

 

Understanding Your Finances

What we don´t know about money can cause financial hardships for us if we aren´t careful. Financial literacy begins with a growing respect for money, setting short and long-term goals, budgeting and saving, as well as making other well-informed financial decisions.

 

The lack of financial literacy skills leads to overspending and an accumulation of debt. The accumulation of debt leads to health problems such as stress, anxiety, and even depression.

 

To better understand your finances it is important to follow the following steps:

• Get Organized

• Set Short and Long Term Goals

• Create A Budget and Savings Plan

• Audit Your Credit Score

• Invest In Your Future

Get Organized

The first step towards gaining financial stability is to get organized. This step requires mental, physical, and emotional organization.

Mentally, you want to prepare and forgive yourself for all of what you have done but didn´t know. Physically, you want to set up automated systems to make your future life easier. Emotionally, you may want to cry or scream but all to get it out. Face it head-on then move on.

Either way, you have to be honest and vulnerable with yourself.

Set Short and Long Term Goals

Setting goals both short and long term won´t be easy but it will be manageable. Write down your goals and be sure to keep them where you can see them each day. 

 

Short-term goals should be goals that you want to achieve within the next 3-5 years. Examples of short-term would be creating an emergency fund, paying off credit card debt, or saving for a wedding.

 

Long-term goals should be goals that you want to achieve beyond 5 years. Examples of long-term goals would be paying off a mortgage, saving for retirement, or saving for your child´s future education.

 

You should understand and know that there will be days with things flow smoothly and there will also be rainy days. With the right mindset, you can achieve much success.

 

Create A Budget and Savings Plan

Having a budget does not mean that you have to stop spending. It is merely a guide to help you stay on track with your spending. A budget shows you exactly how much money is coming in and how much is going out.

 

If at the end of each month, you have a negative number that simply means you would need to restructure your budget. The end goal to a good budget would be to have a positive number at the end of the month. Having a negative number means that you are spending more than you make. 

 

Give every dollar a name. This helps to decrease overspending. You know and see where every penny earned will be going.

 

Recommended Read: How To Create A Budget During A Pandemic

 

Audit Your Credit Score

Overspending each month can cause you thousands of dollars worth of debt which can take a major toll on your credit score.

Review your credit score often and ensure that everything on your report is correct. You can order a free credit report once per year at www.annualcreditreport.com.

 

It is best to dispute errors through the mail. Although it is convenient to dispute online, you legally lose your disputing rights by doing so. Always send disputes via certified mail. 

 

Certified mail requires a signature so that you know your dispute has been received. Credit bureaus had up to 45 days to respond to a dispute before having to remove the error.

 

Recommended Read: How I Increased My Credit Score 100 Points

 

Invest In Your Future

Time waits for no one.

 

You will need to find a way to supplement other income besides retirement to ensure that you continue a financially stable lifestyle.

 

Invest in your workplace 401(K) or 403(B) plan. Max out the amount that the company is willing to match. Without doing this, you are leaving free money on the table.

 

Learn more and become comfortable with investing in the stock market or even real estate. The key is to have more than one stream of income even in your retirement age.

 

Conclusion

Knowledge is power. 

Though April is the designated month for financial literacy, don´t let that be the only time you face your finances. Educating yourself on your finances should be a lifelong thing.

Take action and get started on your path towards financial stability. When you know better, you tend to do better.

What is one thing that you have learned about financial literacy after reading this article? Comment below.