Financial literacy is something that everyone should be conscious of. Many Americans today know of a person that has experienced financial challenges, especially during this Covid-19 environment. Have you ever awakened to see your bank account in the negative? A strong foundation of financial literacy makes a huge difference in life goals such as knowing how to save for education and retirement, running your own business, using debt wisely, and managing your day-to-day incomes and expenses.
So we ask ourselves, what is Financial Literacy?
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. Financial literacy also refers to a variety of important financial skills and concepts. Financially literate people are generally less vulnerable to financial fraud. Americans preferred method of paying for goods and services is through credit cards and loans. Creating debt by using these methods can be great to help build your credit score. However, on the other hand, it may cause financial challenges.
Here are some key factors to improving your financial literacy skills:
- Create a budget and track your expenses monthly.
- Pay yourself first- this will allow you to learn to manage your bills – have a system to pay your bills whether it is online or by mail and keep a tracking system on how you pay your bills (monthly, bi-weekly, etc.)
- Check your credit score at annualcreditreport.com.
- Manage your debt- begin reviewing how to reduce your debt or meet with a credit or budget counselor that will assist you in this process.
- Invest in your future – after all, bills have been paid begin to set funds aside for your future/retirement. Starting small will begin to increase over the years.
Develop a strategy that works for you. Improving your financial literacy skills will not only discipline you but will give you peace of mind and security.