April is National Financial Literacy Month, and it is a time for you to spend time evaluating your own level of literacy. In this three-part series, you can learn new ways to think about your finances, and take away tips on how to maximize your financial resources. Each and every financial situation is different from the next, so it is important to remember this as you are building a plan specific to you.
Part 1: Introductions
Financial Literacy is the ability to understand how money works—coming or going, investing or donating, and all of the above.
To gauge your personal level of financial literacy, ask yourself the following questions:
1. Do you know all of the ways you earn money?
Where is your money coming in from? Is your current job enough to allow you to pay your bills, and also put money away into savings? Or, is it time for you to start looking for something new?
2. Do you know all of the ways you spend money?
Where does you money go? This is an important question to answer in its entirety, because it allows you to realize that you may be spending more than you’d thought. Whether you’re putting more money into your vehicle than its worth, or your eat-out bill for the month is more than you’ve spent on groceries, taking the time to evaluate what you put your money into not only lets you realize what is worth the cost and what isn’t, but also where you can make improvements.
3. How are you saving, and could you do better?
Amidst bills, necessities and entertainment, it’s important to understand the status of your savings. Do you have a savings plan that fits for your income, budget and responsibilities? Have you been sticking to that plan? Are there ways to make that plan more effective? And, what are you saving for?
4. Are you having productive conversations about money?
Do you speak about money at all? Or, do you only mention your finances when you’ve noticed there are problems?
A part of being financially literate is knowing how to talk about money with your spouse, your parent, or anyone who both have an effect and are effected by your finances.
5. Are you factoring in the future?
Just like you wouldn’t wait to train for a marathon the day before, you shouldn’t wait for your future responsibilities to come to consider your future finances. The earlier you begin to plan for the future when it comes to money, the better off you will be when the time comes around.
While you do not have to have all of the answers to these questions right now, it’s important to keep them in mind as you move on towards your personal goals, and as you become more financially literate.