Every life milestone deserves a celebration. Whether it’s saving up for your first car or finally reaching retirement, these are significant financial victories that deserve acknowledgment. After all, it takes a hard-set goal and dedication to reach these events, and that’s nothing to go unnoticed. However, those who lack financial literacy might find these achievements unattainable. Still, with just a little effort to understand finance fundamentals, you can open doors to life’s greatest milestones, too.
What Is Financial Literacy?
To be financially literate does not mean you have to know the ins and outs of all things accounting. But it does take some knowledge in what it takes to not only be financially stable but financially smart. This includes knowing how to budget day-to-day expenses, learning how to manage and pay off debts, and understanding credit and investment products.
A strong financial standing has become more of a priority for younger generations than ever before, making financial literacy necessary to thrive in modern society. But according to Financial Industry Regulatory Authority (FINRA), an estimated 66% of Americans lack financial literacy! This could typically lead to unsustainable debt from poor spending decisions or unpreparedness for long-term purchases like cars or mortgages. Ultimately, this could lead to more significant consequences like poor credit or even bankruptcy.
How to Improve Your Financial Literacy
Fortunately, we’re here to help you learn what it takes to be financially literate, so you can get on the road to success. Here are some things you can do to build healthy habits and watch your finances soar.
Learn How to Budget
The first and biggest step to becoming financially literate is learning how to manage your expenses. It might seem like a small task day today, but in the grand scheme of things, this could result in life-changing habits that lead to long-term success. Simply set a goal for your savings and adjust your monthly spending accordingly. By following budgeting tips, you can reach other goals like getting out of debt quicker.
Save for Emergencies
Did you know only 39% of Americans are prepared to cover a $1,000 emergency bill if needed? The more you budget, the more you save—and the more prepared you are for whatever life throws your way. Those who prioritize their emergency fund are on their way to financial literacy, and soon, a $1,000 emergency fund can turn into up to three to six months’ worth of expenses!
One of the critical goals of financial literacy is to ultimately consolidate debt and prepare your future for prosperity and joyful retirement. Put your budget into play and stay on top of debt payments by dedicating a portion of your monthly income toward paying it off. Develop a plan and pay down your loan with the highest interest rate first. By paying off your debts at a quicker pace, you’re opening up doors to better investments in the future.
Invest in Retirement
While retirement may seem far, saving for it can never be too early. Time flies, and with the average person retiring in their mid-60s, you can never be too prepared for what’s to come. Plans like 401k and Roth IRA offer a good return on investment. If your employer offers a retirement fund, you could be in for long-haul savings that may even be matched by your employer.
Take a Personal Finance Course
While financial literacy is becoming more prevalent in modern society, luckily, the sources to help you get there are just as widespread. There are hundreds of free financial courses available online, from introductions to financial-planning concepts to everything you need to know about risk management. Check out these quick learning courses to build financial capability to help you get started.
Taking the First Step
Every financial journey looks different. While some are just looking to tighten up their spending habits, others are working hard to become debt-free. Wherever you are on your journey, there are online resources and financial advisors to give you a hand along the way. Go Energy Credit Union is ready to help you take the first step toward a prosperous future. Chat with our experienced team or visit a local branch near you to learn more.