Most people have probably heard of financial literacy, but what exactly does it mean? If you’re like many Americans, you did not learn about this skill in school or college. Financial literacy is the is the ability to understand and properly apply financial management skills, including budgeting, spending, debt, taxes, retirement savings, and emergency savings. Financial literacy helps individuals become self-sufficient so that they can achieve financial stability. The lack of financial literacy may lead to making poor financial choices that can have negative consequences and make it difficult to achieve future goals.
Some of the main steps to achieving financial literacy include learning the skills to create a budget, the ability to track spending, learning the ways to pay off debt, and planning for retirement. Creating and maintaining a budget is one of the most basic aspects of staying on top of your finances. Without following a budget, it’s difficult to hold yourself accountable on where your money is coming from and what it’s going toward. There are many phone apps available now that can help if you’re struggling on where to start. Budgeting can also make it easier to start setting savings goals.
Another important part of financial literacy is knowing about credit and how to use it. When was the last time you checked your credit report? Do you know your interest rates on your credit cards? How much is it costing you to carry a balance on your credit card? If you are needing some help with your debt or getting back on track with your credit reaching out to a certified credit counselor is a good idea.