Financial literacy can help you build financial wellness. Gaining a firm understanding of credit, debt, smart spending and saving will help you in several ways. Here are just a few practical topics to get started learning.
- Establishing a budget. Getting a precise and clear picture of how you spend your money monthly is important. Creating a budget and sticking to it is a fundamental step in money management.
- Setting financial goals. Financial goal setting helps you get motivated and find ways to prepare for large expenditures, investing and retirement.
- Balancing your spending. There are ways to balance your expenses. Using the 50/30/20 budget rule or the zero-sum budgeting methods are a couple practical ways to start.
- Managing debt. Carrying some debt is normal, but too much debt can overwhelm your budget. There are ways to start ditching your debt today. Understanding the strategies for credit card and debt management is also important. Organizing your finances and looking at options for automating spending habits will help you lay out your plan.
- Saving money. Regardless of your age or stage in life, knowing the best ways to save money will help you achieve your goals and help teach others how to save and invest. Learn about basic savings accounts, retirement accounts and how to make compounding interest work for you.
- Understanding lending. Understanding when it makes sense to borrow is important. Whether you're going back to school, taking out home equity, buying a car or remodeling a room, you might need to take out a loan or get a credit card. Learn how your credit score and credit report has an impact on the availability and cost of a loan, and how to fit loan payments into your budget.
- Preparing when buying a home. Be educated on ways to save for a down payment and how to obtain financing. Having a firm grasp on the details of mortgage loans will help you make the best decision. Using a home buying checklist can help you prepare and avoid the risks of mortgage loan denial. The U.S. Department of Housing and Urban Development offers information for potential buyers on its site.
- Planning for emergencies. Unexpected emergencies can have a heavy financial impact. Many financial professionals recommend having an emergency savings fund. Find out how to plan ahead for these unwelcome surprises and keep your budget intact.
- Getting outside advice. Figuring out finances is not always easy. Many people choose to get advice and consult a financial professional.
Resources and calculators to help increase your financial literacy
Here are a few resources and tools that may help.