How to Improve Your Financial Literacy
April is financial literacy month. Officially kicked off by the federal government in 2004, financial literacy month is designed to raise public awareness around financial literacy and how we manage our money. And there’s at least one good reason to set aside an entire month for talking (and learning) finance: Money can really stress us out. A 2018 study by FINRA Investor Education Foundation found 53% percent of respondents feel anxious discussing their finances.
When asked to take a five-question financial literacy quiz, only 34% of respondents answered four or more questions correctly. The more we know, the better we can manage our own money (and lower those anxiety levels). Thankfully, whether you consider yourself a novice or an expert, there’s always more you can do to boost your own financial literacy and sharpen your money management skills.
Here is a roundup of great places to start:
Budgeting: the cornerstone of financial literacy
Your budget is the foundation of a good money management plan. Whether you’ve been budgeting for years or you need to build your first plan, we have you covered:
Budget 101: Creating a budget is the easiest way to set yourself up for financial success. Following these 10 steps can help you regain control of your personal finances and start saving for the future.
Setting Goals: A good budget will help you uncover where and when you’re spending money—and it isn’t necessarily about limiting yourself. Learn how to set practical goals for budgeting success.
Finding the Right Budgeting Software: Allowing a computer to crunch the numbers for you can dramatically reduce your time and stress levels as well as provide a more robust and clear look into your personal finances. In fact, we’ve found that 93% of heavy users work with their budgeting software at least once a week. But not all budgeting tools are created equal. Here is what you need to know.
Understanding the finer points of saving is a key component of personal financial literacy. Knowing where to stash your cash to help it grow and how much you need to save can set you up for a solid financial future.
The Basics: Emergency Funds: A 2019 Bankrate survey found 60% of respondents couldn’t cover a $1,000 unexpected expense from their savings alone. Here’s a primer on the benefits of an emergency fund—and how to build one.
Rebuild Your Savings: If you’ve used up all of your savings, rebuilding your financial safety net as soon as possible is an important priority. This five-point plan can be used to rebound after any financial emergency.
Advanced Course: Sinking Funds: A sinking fund is a strategy where you’re putting money away for future planned expenses. The idea comes from a corporate term used by companies that set aside money to pay off a debt or bond. Lucky for the rest of us, personal finance experts like Dave Ramsey recognized it as a savvy budgeting strategy for individuals and families, as well.
The key terms that go hand in hand with debt should be at the top of your financial literacy vocabulary. Most of us struggle somewhat when it comes to understanding compound interest, sorting out our annual percentage rate, or knowing off the cuff if we’re getting the best interest rate on our mortgage. These primers can help you stay ahead of the curve.
Simple versus Compound Interest: Simple interest is earned solely from the principal amount—the amount you save in a savings account or the value of the loan you take out. Compound interest is earned both from the principal amount and the interest that you’ve accumulated at that point. Here’s a breakdown of how it all works.
Understanding Your Loan: Getting the best loan for your needs means understanding all the terms before signing on the dotted line.
Refinancing Your Mortgage: Simply put, refinancing a mortgage means paying off an existing loan to replace it with a new one. Refinancing your mortgage can be a tempting prospect for a variety of reasons, including lowering your monthly payments, taking advantage of a lower interest rate, or folding other debts into one larger loan. But you have questions to consider before you sign on the dotted line.
Your credit score impacts everything from your interest rate to how much you can qualify for—and maybe even getting a new job. Understanding how your credit history and credit scores work can help you maintain—or build up—a high credit rating.
Credit Report Basics: our credit report offers a snapshot of your financial health to anyone who reviews it, and that can be a lot of people, from cellphone providers and potential employers to lenders and credit card issuers. With so much importance placed on these reports, it’s important to understand what’s on them.
Credit Score Basics: The credit scoring algorithm used by the Fair Isaac Corporation looks at five factors: your payment history, how much you owe, how long you've had credit, how much new credit you've recently applied for and the various kinds of credit you've used. Here’s how it all breaks down.
Improving Your Credit Score: To help you build a solid financial plan — and a stellar score — here are six tips for creating a budget that will have the best effect on your credit.
Having enough to live on in your golden years isn't an issue of luck, but of careful planning. Whether you’re just starting to plan or you’re almost ready to retire, we can help you make sure you’ll be comfortable with your nest egg.
Retirement Basics: When is the best time to start saving for retirement? That's today. Here’s how to get started at any age.
Recession-Proof Your Retirement: Instead of worrying about when the next recession may strike or trying to predict it based on conflicting information, the wisest course of action is to simply prepare for it. Here are six steps to take.
Are You Ready to Retire? From managing expenses to making sure you have enough stocked away to live the life you want—here’s what to consider before you retire.
How do you gain financial literacy?
While April might be financial literacy month, we think financial literacy is a lifelong learning process. No matter your age or skill level, the steps you take today, tomorrow, and years from now all build up toward a better, more secure financial future. Personal budgeting software like the suite of products offered by Quicken can help you reach your financial goals, whether that be building an emergency fund or retiring early.