- Francesca Sacco
Get back to the financial basics this National Financial Literacy Month
April is National Financial Literacy Month, so it’s the perfect time to reflect on your personal finances! Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting and investing. It is the foundation of your relationship with money, and there are always the benefits to growing your financial knowledge!
When was the last time you thought about ways to improve your financial literacy? One of the best places to start is the basics.
While it may seem unnecessary to go back to the basics, it never hurts to have a refresher on the responsible use of money.
Here are some important basics to remember during financial literacy month:
Live within your means
The first and most basic rule of personal finances is to live within your means. What does that mean? Simply put, you should earn more than you spend each month. After paying your expenses each month – and putting aside some money for savings and other future expenses – you should have a little left over.
This is tougher than it may appear. If you’re struggling to live within your means, start with creating a budget to help you get on track.
Save. Save. Save
Living within your means isn’t enough. It’s also important to save. Preparing for what’s next is a vital part of your financial journey. Some ways to save for your future include:
- Contributing to tax-advantaged retirement plans
- Building an emergency fund so that you are prepared for unexpected expenses
- Looking ahead to planned expenses and saving for them a little at a time
Saving for the future is a big part of creating your own financial success. As you get more comfortable in your financial journey, you should start to include some type of investing. If you don’t already have a retirement plan, starting one is an easy way to get into investing.
Protect your assets
Many people forget to protect the assets they already have, which can be easily accomplished through purchasing insurance.
While the monthly premiums can be unpleasant, insurance protects you financially in the most unimaginable situations. If you are new to purchasing insurance, be sure to shop around before making a final decision.
Set your priorities
It’s easy to overlook setting your priorities as you move along your financial journey. But you can improve the ways you spend and save your money when you set your priorities. Take some time to decide what’s important to you and then make a commitment to put that spending – or savings – first.
For an example, if you have an upcoming trip, saving for that trip should become your priority. Maybe you forgo eating out or skipping your daily cup of coffee in order to reach your financial goal. Whatever you choose, a budget can help you along in your efforts.
Get out of debt
While it’s always best to avoid debt in the first place, finding ways to get out of debt are vital to your financial journey. Create a plan and pay down your debt.
If you currently aren’t carrying any debt, make sure to borrow as little as you can moving forward. If you must borrow, always borrow the smallest amount possible and be mindful of high interest rates.