April is National Financial Literacy Month which promotes the importance of smart money management habits to improve financial wellness. It is an ideal time to take a pulse check on your relationship with money. In addition to making money, you should understand how to save, spend, and invest it.
Your ability to understand money and use it effectively is known as financial literacy. In addition to saving and spending, financial literacy encompasses paying taxes, funding your retirement, purchasing real estate, and managing your money day-to-day. Sound financial skills can give you confidence and help erase the anxiety that often accompanies financial topics. Likewise, they can allow you to achieve financial stability and reach your financial goals.
Why Financial Literacy Matters
Financial knowledge allows you to make responsible money decisions. Without this understanding, you’re more likely to accrue debt that can get out of hand. Being financially literate can also help you manage bills and ensure they’re paid on time. Financial literacy can also help you understand your bank statements and make it easier for you to notice unauthorized activity on your financial accounts. It also allows you to better understand how interest works, the importance of your credit score, and how to achieve the type of financial freedom you want.
Financial literacy can have a big impact on your local and national economy, too. Financially sound habits not only help your own financial situation, but they support economic health as well. These habits include:
- Accruing wealth
- Spending within your means
- Borrowing money wisely
- Resisting predatory loans
- Preparing for financial challenges
With financial understanding, you’re able to evaluate your financial picture, make positive changes in your spending habits, and create better financial circumstances for yourself and your family. It can also allow you to fund your child’s education, enjoy hobbies, prepare for the future, and navigate roadblocks along the way.
What Topics Should I Focus On?
Financial literacy consists of several personal finance categories. Here are some essential topics to focus your learning on, as well as some resources to help get you started:
1. Budgeting.
a. Budgeting Tips: https://www.bankfive.com/blogs/january-2021/budgeting-tips-to-consider-in-2021
b. Budgeting Resources for Parents: https://www.bankfive.com/personal/resources/banking-resources-for-parents
c. Budgeting Tools to Consider: https://www.bankfive.com/blogs/june-2021/tools-to-help-you-budget-and-save-money
d. Budget Planning Calculator: https://www.bankfive.com/personal/resources/calculators/budget-calculator
2. Saving.
a. Saving for a Wedding: https://www.bankfive.com/blogs/march-2023/6-financial-tips-for-planning-a-wedding
b. Saving for a Home: https://www.bankfive.com/blogs/july-2021/tips-to-begin-saving-for-a-home
c. Saving for Emergencies: https://www.bankfive.com/blogs/december-2017/create-an-emergency-fund-for-life%E2%80%99s-unexpected-snags
d. Saving for College: https://www.bankfive.com/blogs/november-2022/saving-for-your-child%E2%80%99s-college-education
e. Saving for Retirement: https://www.bankfive.com/blogs/october-2018/it%E2%80%99s-not-too-late-to-save-for-retirement
f. What to Look for in a Bank Account: https://www.bankfive.com/blogs/march-2023/what-to-look-for-in-a-bank-account
g. Saving Calculators: https://www.bankfive.com/personal/resources/calculators
h. Investing – Where to Start: https://www.bankfive.com/blogs/august-2021/investing-where-to-start
3. Borrowing.
a. The Difference Between a Secured and Unsecured Loan: https://www.bankfive.com/blogs/november-2022/what%E2%80%99s-the-difference-between-a-secured-and-unsecured-loan
b. Buying a Home with No Down Payment: https://www.bankfive.com/blogs/january-2019/buying-a-home-with-no-down-payment
c. VA Loans Explained: https://www.bankfive.com/blogs/may-2022/what-exactly-is-a-va-loan
d. When a Loan Requires Collateral: https://www.bankfive.com/blogs/december-2022/what-does-it-mean-if-my-loan-requires-collateral
e. Tips for Paying Off Student Loan Debt: https://www.bankfive.com/blogs/june-2021/tips-for-paying-off-student-loan-debt
f. Private Mortgage Insurance Explained: https://www.bankfive.com/blogs/june-2016/the-ins-and-outs-of-pmi
g. Tips for First-Time Home Buyers: https://www.bankfive.com/blogs/march-2022/tips-for-first-time-buyers-in-today%E2%80%99s-challenging-housing-market
h. Borrowing Against the Value of Your Home: https://www.bankfive.com/blogs/december-2021/borrowing-against-the-value-of-your-home
i. Having a Co-Signer on a Loan: https://www.bankfive.com/blogs/august-2022/having-a-co-signer-on-a-loan
j. Financing Home Renovations: https://www.bankfive.com/blogs/april-2022/tips-for-financing-home-renovations
k. Things to Do Before Applying for a Mortgage: https://www.bankfive.com/blogs/june-2022/4-things-to-do-before-applying-for-a-mortgage
4. Paying taxes.
a. Don’t Forget Property Taxes When Buying a Home: https://www.bankfive.com/blogs/march-2018/don%E2%80%99t-forget-property-taxes-when-buying-a-home
b. Tax Preparation Checklist: https://www.bankfive.com/blogs/february-2023/your-2023-tax-preparation-checklist
c. Escrow Accounts Explained: https://www.bankfive.com/blogs/june-2022/what-is-an-escrow-account
d. How Much to Tax to Withhold from Your Paychecks: https://www.bankfive.com/blogs/july-2020/are-you-having-enough-tax-withheld-from-your-paychecks
5. Credit scores.
a. Why Your Credit Score is Important: https://www.bankfive.com/blogs/january-2023/why-is-your-credit-score-so-important
b. Tips to Help Improve Your Credit Score: https://www.bankfive.com/blogs/october-2018/5-important-tips-to-improve-your-credit-score
c. Credit Card Payoff Calculator: https://www.bankfive.com/personal/resources/calculators/credit-card-payoff-calculator
6. Money management.
a. Tips to Better Manage Your Finances: https://www.bankfive.com/blogs/july-2022/tips-to-better-manage-your-finances
b. Joint Accounts vs. Separate Accounts: https://www.bankfive.com/blogs/april-2017/should-you-merge-your-money-joint-accounts-vs-separate-accounts
c. Tips for Avoiding ATM Fees: https://www.bankfive.com/blogs/june-2017/tips-for-avoiding-atm-fees
d. Financial Mistakes that Could Cost You: https://www.bankfive.com/blogs/july-2017/financial-mistakes-that-could-cost-you
e. Paycheck Advance Apps: https://www.bankfive.com/blogs/december-2022/paycheck-advance-apps-is-there-a-catch
f. Credit Cards vs. Debit Cards: https://www.bankfive.com/blogs/december-2017/knowing-the-difference-between-credit-and-debit-cards
g. Adding a Secondary Signer or Beneficiary to a Bank Account: https://www.bankfive.com/blogs/march-2019/adding-a-secondary-signer-or-beneficiary-to-your-bank-account
Financial literacy is an essential part of gaining mastery over your money. Remember that practice makes perfect. You might make mistakes as you tweak your budget or navigate investment options, and that’s okay. Commit to learning and growing as you hone your skills. Then, you can begin to achieve your goals and discover financial stability and security.