What You Need to Know About Financial Literacy
(1) Proactive Budgeting
The best way to keep your finances in line is to budget in advance. Annual budgets can be used to allocate income for major expenses such as rent, groceries, utilities, etc. Monthly budgets can include more specific expenses that can be sorted into these categories and budgeted appropriately. Weekly budgets are helpful for keeping track of unexpected or smaller expenses. There are many apps that help keep budgeting streamlined and organized, check out: Digit, Personal Capital, or Mint!
(2) Security and Safety
As finance becomes more and more technologically advanced, there are new types of cyber threats that are important to protect yourself against. A major component of protecting your finances and other personal information is to regularly change your passwords, making your passwords difficult to guess, and only disclosing account information to a limited amount of people
(3) Start Saving Early
Things that may seem distant, such as paying for retirement or a young child’s higher education will approach more quickly than anticipated and it is important to save up early for these major expenses. Saving requires discipline and is easier to achieve when clear goals are set.
(4) Credit Responsibility
Managing your credit is essential in order to effectively utilize the financial system. Unfortunately, irresponsible credit practices can get you into a difficult position from which recovering is extremely hard. Thoughtful use of credit is integral to financial health and so it is important to establish responsible credit habits early on.
(5) Compounding Interest
For many people, it can be hard to understand the massive impact that interest can have on your finances. Keeping track of compounding interest can allow you to make informed choices when borrowing money and smart decisions when saving or investing.