It's Financial Literacy Month: Brush Up on Your Financial Skills
Did you know that April is Financial Literacy Month? Financial Literacy Month is a national campaign designed to bring more financial education to children and adults.
Whether you're a financial wiz or just learning the ropes, there are many ways to improve your financial literacy. Here are four to get you started.
Make a Monthly Budget
One of the most important steps in ensuring financial success is creating a monthly budget. This can be simple, which is good because a budget is your financial strategy's foundation.
Creating a monthly budget doesn't have to be complicated. Here's how to ensure you're setting yourself up for financial success:
- First, calculate your gross monthly income. This could include your salary, investment income, Social Security, child support/alimony, freelance work, or other income sources. Remember to calculate your net income as well, which is how much is left after taxes and other deductions.
- consider your financial priorities – all of the bills that must be paid each month (rent, utilities, health insurance, etc.) and allocate your budget accordingly. In addition to your regular monthly expenses, add in guesstimate amounts for discretionary spending (groceries, clothes). You might also decide to account for general savings or earmark money toward a large purchase such as a home or car. The primary point is to decide what's important to fit into the budget, and to make sure your budget reflects those values.
- Finally, after creating these detailed expense categories for where your money is spent, track each and every expense. It's important to differentiate between wants and needs. You need to pay the rent or mortgage payment, but you want a new pair of shoes or a nice dinner out. By tracking your spending, you can determine whether your budget is aligned with your priorities or if you should make adjustments to meet your goals. Try to track your spending for at least three months. More is better, but three will help you to get an idea of where your money is going and how to budget it better.
Check Your Credit Score
If it's been a while since you checked your credit score, now is a great time to see where you stand. Your credit score is an important metric when considering your financial health and will play a larger role when you apply for loans, especially mortgages and car loans. If you have a higher credit score, you may qualify for lower-interest debt, which will save you money. The Federal Trade Commission provides information on how to request your free annual credit report.
Reviewing your credit report is important to ensure there aren't any mistakes or incorrect accounts assigned to you. If you notice something on your credit report that doesn't look accurate, such as a loan or credit card you don't remember opening, contact your financial institutions immediately. You can also file a dispute with the credit reporting agencies to report any false information you find.
Understand Your Investment Options
As you become more financially literate and feel comfortable talking about finances, you may consider looking into investments that are aligned with your goals. There are many different types of investments such as stocks, bonds, mutual funds, ETFs, etc., and your HCM advisor can help you understand your options.
Don't Be Afraid to Ask Questions
Talking about finances can be intimidating, but we all must start somewhere. There's no such thing as a dumb question when it comes to becoming more financially literate and secure and we encourage you to reach out with any and all questions you may have.
Financial literacy doesn't come from making big leaps but rather from taking one step at a time. Pick one of the options above and start yourself on the path to becoming financially savvy.