A few days ago I posted a tip on teaching kids about money. I'd also like to share a Q&A I did with the National Foundation for Credit Counseling regarding financial literacy to help wrap up Financial Literacy Month.
1. What exactly does "financial literacy" mean?
Financial literacy can mean numerous things. Being financially literate means knowing how to manage money, use credit effectively, build wealth, and make sound financial decisions. It has nothing to do with the amount of your income. It means knowing what to do with your paycheck once you’ve earned it. Financial literacy can mean economic security and overall well-being for consumers that are well-educated and well-informed. You can potentially make better decisions for yourself and your families, and also contribute more to your communities and encourage economic development. Being financially literate also means having the knowledge to make informed choices for you, your family, and your community.
2. What are some good ways to help raise kids' level of financial literacy?
This is actually going to be a separate post, since they provided so many great ways!
3. If families are struggling financially, what should their first priorities be?
Live within your means – Simply put, don’t spend more than you make. To accomplish this, put the credit cards away. Many well-meaning people resort to living off of credit when facing a financial crisis, digging an even deeper financial hole. Instead, try living on a cash basis. People who do this typically spend 20 percent less, and they do it without feeling deprived. They buy what they want, but since their level of awareness has increased, they don’t spend as frivolously.
Get financially organized – Sometimes people become so overwhelmed that they bury their head in the financial sand. Not only do they neglect paying their bills on time, they don’t even open the monthly credit card statements. Such habits result in late fees, a tarnished credit report and a lower credit score. Become financially organized by creating a cash-flow calendar where you record each payday for everyone in the home who earns money. Next, write down which bills are to be paid out of each check. Get into the habit of keeping all bills in one location so that you can easily put your hands on them, and commit to visiting your financial center at least once per week.
4. If families are doing comfortably financially, what are some things they need to consider?
Create a rainy-day fund – Many people say they can’t afford to save. Neither can they afford to be ill-prepared for the inevitable money-gobbling emergency. Now that you’ve tracked your spending and are allocating where your money goes, be sure to include a savings category with money ear-marked for that purpose each month.
5. What are some common mistakes to avoid, both for those who are struggling to make ends meet and those who are doing well?
Follow these tips to stay on sound financial footing:
- Don’t live beyond your means.
-Review your paycheck withholding allowances to make sure that the proper amount is taken out of each paycheck. You don't want to end up owing Uncle Sam, nor do you want to give him more of your hard-earned money than you need to each month.
- Develop a spending budget for holiday shopping.
- Review your credit scores frequently to ensure there is no misinformation listed which can negatively impact your score resulting in higher rates/fees.
-Resist the urge to only pay the minimum balance due on your credit cards.
No comments:
Post a Comment