April is Financial Literacy Month - Are you financially literate?
April 2, 2008, 3:26 pm
10 financial literacy tips from Springboard in honor of "Financial Literacy Month."
Only 10 percent of Americans graduate high school with instruction in personal finance. That lack of knowledge can carry on into college and adulthood, according to Jump$tart Coalition, a non-profit organization that seeks to improve the personal financial literacy of young adults. April is Financial Literacy Month and with record millions of Americans in debt, now is the time for adults and their children to start learning Personal Finance 101.
The growing problem of financial illiteracy is also alarming many government officials, including Treasury Secretary Paul O'Neill. At a recent Senate Banking Committee Hearing, O'Neill pointed to financial illiteracy as evidence of our nation's gross escalating consumer debt, an anemic personal savings rate and the increasing number of personal bankruptcies.
To mark Financial Literacy Month, Springboard, a non-profit consumer credit management organization, has compiled several tips for consumers regarding basic personal finance.
Springboard's tips include:
- Establishing a budget - Families need to determine a monthly budget to track what is going in and what is going out. Once that has been established, determine what expenses are needed and what are optional and explain your budget to the entire family. If there is some spare money left in the budget, involve the entire family in determining how it should be spent or saved.
- Evaluating your expenses - Better money management comes from changing bad habits and prioritizing needs and wants. Involve your kids in coupon clipping, bargain shopping and how to look for the best deals.
- Make it a family affair - Involve your family in money management issues. Explain salaries, bills and your monthly budget. Encourage your kids to learn by giving them an allowance and showing them how to budget and save their money.
- Trimming your expenses - Learn how to become more efficient and practical with your money. Avoid unnecessary costs associated with the telephone, electricity and water bills. Make calls during non-peak times, only turn on lights in the room you are in and don't take half-hour showers.
- Knowing your credit report and credit score -- Review your credit report to give you a good idea of where you stand financially. Many consumers do not know how to read, understand or even obtain their credit report and score. If you don't, credit management organizations such as Springboard can help you obtain and explain your credit report and score.
- Understanding the fees - Do proper research on credit card interest rates and bank fees. If your credit card has a 14-19 percent monthly interest rate, look for a new credit card! There are many credit card companies offering low introductory interest rates and lower than 10 percent monthly interest following the introductory offer. Shop around for the best deal and transfer existing balance to the new card. Read the fine print and then show your kids how to select the best credit card and manage it properly.
- Contribute to savings - Start saving early and consistently. If you don't currently put a percentage of your paycheck in savings, start now. Establishing an emergency savings fund is a must. You should have enough saved to cover three to six months of living expenses.
- Start a college fund for your kids - It is never too early to start socking away money for college. If possible, start contributing money to your children's college fund. Before you know it, you will have a sizeable amount of money to contribute to their higher education.
- Invest in the future -- If possible, invest in an IRA, mutual fund or stocks. The money will increase over the years and you could end up making a sizeable investment for your future.
- Need more help? - Credit counselors, such as Springboard, offer free educational programs on personal finance from how to balance your checkbook to how to get yourself out of debt. Springboard also offers a program called Credit When Credit is Due (CWCID). CWCID is comprised of a 12-lesson textbook that will help educate consumers about money issues and responsibilities, and can be taught by an accredited counselor or self-studied. If you need help, don't shy away from learning how to best manage your money.
