Everyone deals with money, day in and day out. From the pocket money spent on a candy bar to paying the bills, most of your daily activities involve money in some way or another.
The problem with this is that many of those everyday transactions become mindless, and being smart about finances sometimes gets ignored. And when it comes to the more complex side of money, many people don't even know where to begin.
Financial literacy goes well beyond knowing how much money is in your bank account (though that is certainly essential). But education is empowerment, and the more you know, the more beneficial your financial decisions can be.
If you've ever felt lost when it comes to handling your personal finances, consider these tips for developing your financial literacy.
1. Keep your credit in check. The best things in life are free, as they say, and that maxim applies to managing your finances. Step one in building your personal financial literacy is checking your credit - and you get to do that for free, once a year, from the major credit reporting agencies. Your credit report is a little like a personal financial map - it lets you know where you stand, where road bumps are, and where you need to go. If you haven't yet done your annual credit check, go to www.equifax.com, www.transunion.com, or www.experian.com and get started. Be sure to look over your report for errors and inaccuracies - you should dispute any problems that you find. Also note differences amongst the reports. While you actual score may vary between the 3 reports, the information should all be similar.
2. Create a budget. Once you've checked your credit report to get an idea of your financial profile (and how lenders view that profile), you'll have a better idea of what your next step should be. Maybe you've discovered that you need to curtail your credit card spending, or perhaps you found out that you're in better shape than you thought. Whatever the case, developing a budget for yourself gives you a more thoughtful approach to your money. Budgeting software and programs are widely available, and make the task much simpler. Try setting a goal - such as saving up to go on vacation, or paying down credit card debt - and then building a budget around that goal. You'll likely find yourself more motivated to monitor your spending and saving.
3. Don't be afraid to ask a professional. Because it covers so many topics and has so many intricacies, finance can be incredibly complex; it's one of the main reasons that many people are not financially literate. Going to someone who has devoted their life to knowing the ins and outs of finances is a good idea if you feel that there are some topics you just can't figure out on your own. Paying for their services could be well worth it in the long run, as they can help with investments and make you better able to deal with financial decisions. Contact FNBT at 800.667.4401 to arrange a meeting with a professional.
4. Explore information. From the Web to radio to TV, an almost limitless supply of financial information is available to you. If you've always changed the channel or clicked away from financial stories in the media, consider setting down the remote or the mouse and make an effort to listen. If you get in the habit, you never know what you might learn.
For more Sound Advice, visit our Financial Wellness Center, a free online educational tool that explains critical money management concepts in a series of interactive segments.