Spring has arrived! Which means warmer weather, baseball season is back and to kick it all off, we have April designated as Financial Literacy Month. Although this event may not have you immediately jumping for joy, it’s a serious topic relevant to all Americans, any age and in any location. After all, these statistics are very telling: (1)
- 40% of Americans don’t even have $400 set aside for an emergency
- 25% of Americans don’t have anything saved for retirement
- A third of survey respondents claim they don’t make enough money to meet their needs and save
Whether you fall in one of these categories or not, financial literacy is still relevant to everyone. Even if you’re making ends meet today, how are you saving for the future? Or how are you teaching your kids and the younger generation about the importance of money management and saving?
Although financial literacy skills are an ongoing skill to continually work on, April is the perfect month to highlight the importance of it. In fact, it has even evolved from a Youth Financial Literacy Day to Financial Literacy for Youth Month to now, National Financial Literacy Month. Join in with other financial institutions, nonprofit organizations and companies to promote this month – specifically how to effectively handle money and deal with debt – both now and in the future.
So where to get started? That depends on you, your current situation and future goals. Since financial literacy covers a variety of personal finance topics – from credit and debt management to all the different ways you can make responsible financial decisions – there is no bad place to start, but the key is to get started early and continue to actively manage your financial health.
We broke down your financial health into 3 key buckets, along with sample focus areas in each. These are just examples to get you started; there are numerous other places that may be a better fit for you to focus on this month.
#1. Planning – “a goal without a plan is just a wish”, a quote by Antoine de Saint-Exupery, sums it up pretty well. This translates to the notion that simply stating you have a goal is not enough. You need a plan to go with your goal in order to produce results. Here are some examples of how you can align a goal with a plan:
- Debt Management: if your goal is to pay down debt, make a plan to go along with it. For example, put $1,000 each month toward credit card debt or increase student loan payoff by 3% each payment period. This plan makes your goal more real and helps you actually achieve it.
- Actively Manage Your Budget: if your goal is to save for a big trip next year, your plan can be to manage your budget accordingly. You may consider using a software tool to track your spending to help you map out a more realistic budget. Then you can set your budget and monitor your progress. This will allow you to actively monitor your spending and be able to fund your future saving goal.
#2. Action – “an idea that is developed and put into action is more important than an idea that exists only as an idea”, a quote by Buddha, emphasizes the importance of taking action, instead of being all talk. Taking action proves that you’re willing to put in the effort to achieving your goals. Here are some examples of action items you may take to improve your financial health:
- Maintain Good Credit – instead of just hoping you have a good credit score, put it into action. Get a free annual copy of your credit report to understand your own credit history and check for any potential fraud on your report (if there is, ensure you go through the necessary steps to get it fixed right away). If your credit score isn’t where you’d like it to be, do your research or talk to a professional on how you can get it higher. A credit score is too important to simply leave to chance; make sure you’re going through the necessary actions to keep yours in good shape.
- Stay on Budget – even if you have already set your budget, you should still track your spending according to the plan you laid out. If you monitor your spending and notice any trends, you can consider adjusting your budget or being more cautious of that specific spending habit.
#3. Saving for the Future – “save money and money will save you” is a fun spin on a very real concept. Write down your short-term and long-term goals so you can develop a plan and action to achieve it accordingly. Documenting what your financial goals are will keep you on the right path to success.
- Short Term: Fund an emergency fund – although there’s no magic formula for the perfect amount of emergency fund to have on hand, it’s important to build up this account for future obligations. It likely doesn’t happen overnight, so putting a plan in place to set a certain amount of dollars aside per month can help you get to this goal.
- Long Term: Save for retirement: As Albert Einstein says, – “Compound interest is the eight wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” Planning for retirement takes years of saving to ensure you have enough money when the time comes to retire. In addition to setting money aside, it’s also important to ensure your money is growing with the right strategy. Understanding your complete retirement picture, such as how much you’ll need, when you plan to retire and any retirement goals you may have (such as traveling), will help keep your retirement plan aligned with your future needs and wants.
April is Financial Literacy Month, and for good reason! Use this opportunity to fine tune your financial health – from planning to putting it into action to saving for the future. There’s no time like the present to make any changes and plan for the future. Happy April!
Need help or resources with budgeting or financial literacy? Check out Banzai!