I’m a financial frontline worker. Like most people in public-facing jobs, I’ve seen it all — from bankruptcy to intestacy. That includes a lack of basic financial literacy, across all communities.
Financial literacy is not about reading the Wall Street Journal, it’s about understanding your numbers. The grand total of your monthly expenditures will serve as the foundation to your financial literacy.
The good news is that it’s not rocket science, and it’s pretty easy to catch up:
- Podcasts are an amazing resource for any topic, especially finance.
- Be sure to understand the difference between saving and investing.
- Creating a real spending plan is, often devastatingly, educational.
- A financially savvy person knows when to ask for help.
- Ask a lot of questions of your financial advisor, CPA, attorneys, or bookkeeper.
Financial literacy includes staying on top of your data. You may have heard that we are in a state of inflation — that means prices are going to change everywhere, and we all need to update our spending plans. The one thing you don’t want is a plan that you ignore, or a plan that basically turns into a grocery list without prices. Staying true to your plan is easier if you remember the old saying: Garbage In, Garbage Out or GIGO — meaning that something is only as good as the data that goes into it.
The last component of financial literacy is the emergency fund. The general consensus is to save with a goal of six times your monthly expenses. This is such an important thing to have because when people don’t, they have to borrow money. That need may lead people straight to predatory lenders, or worse. An ample pool of cash standing by can mean the difference between surviving a life-changing event and persevering through it.
For more information on the ways in which we help clients become more financially literate, click here.
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