Financial Literacy - Something Everyone Needs To Understand
There are two main topics at the top of everyone's mind right now with COVID-19. The first is obviously the health and wellness of everyone. The second is the economy and the elements related to it. With good reason as unemployment rates soar to levels not seen since the Great Depression. Many predicted we would be heading towards a recession in 2020, long before the economic downturn from the pandemic. If you've looked at your 401k lately you'll know things have taken a big hit. (If you haven't looked, don't, just know that it is a long term investment and look in 2022.)
All of this is just another reminder of our need as individuals to have a solid foundation in financial literacy. Most people are finding more time on their hands, what better way to spend it than to figure out how to understand your personal financial situation and what you need to do differently for the next crisis. There might not be a global pandemic but there will always be job losses, medical situations and other financial hardships that can stretch a family. It doesn't take much to impact you when you are living paycheck to paycheck, have a lot of debt and no savings.
The first step is to make sure you understand a number of key concepts. Dave Ramsey is an excellent resource on understanding personal finance in simple terms. A good starting point is this collection of terms and concepts around financial literacy. The second step is to make a plan about how you are going to build an emergency fund and how to get out of debt. Having any amount of money in savings is the number one factor to help you deal with life's situations. Even simple ones like an unexpected car repair. I set aside money every month specifically targeted for auto expenses. It covers us when we have a car repair pop up and helps save towards a nice down payment on a future car purchase. If you have no savings, then start somewhere. Get to $100, then get to $1000. Start paying off debt so you aren't spending extra money every month on interest to a credit card company. Then take the money you were paying in interest every month on your credit card and put to savings. You aren't going to fix it overnight, but the only way to fix it is to start.
No matter your age or your financial situation, these are some of the most important concepts you can learn in your life. I was never taught these things growing up, I had to learn them the hard way, and through my own research. It is an area that I'm going to be stressing highly with my girls as they start working. It may not be the most interesting subject to you, but it is one of the most important in life. Plus there is nothing more satisfying than hitting your savings goals and having money available when you need it most.
All of this is just another reminder of our need as individuals to have a solid foundation in financial literacy. Most people are finding more time on their hands, what better way to spend it than to figure out how to understand your personal financial situation and what you need to do differently for the next crisis. There might not be a global pandemic but there will always be job losses, medical situations and other financial hardships that can stretch a family. It doesn't take much to impact you when you are living paycheck to paycheck, have a lot of debt and no savings.
The first step is to make sure you understand a number of key concepts. Dave Ramsey is an excellent resource on understanding personal finance in simple terms. A good starting point is this collection of terms and concepts around financial literacy. The second step is to make a plan about how you are going to build an emergency fund and how to get out of debt. Having any amount of money in savings is the number one factor to help you deal with life's situations. Even simple ones like an unexpected car repair. I set aside money every month specifically targeted for auto expenses. It covers us when we have a car repair pop up and helps save towards a nice down payment on a future car purchase. If you have no savings, then start somewhere. Get to $100, then get to $1000. Start paying off debt so you aren't spending extra money every month on interest to a credit card company. Then take the money you were paying in interest every month on your credit card and put to savings. You aren't going to fix it overnight, but the only way to fix it is to start.
No matter your age or your financial situation, these are some of the most important concepts you can learn in your life. I was never taught these things growing up, I had to learn them the hard way, and through my own research. It is an area that I'm going to be stressing highly with my girls as they start working. It may not be the most interesting subject to you, but it is one of the most important in life. Plus there is nothing more satisfying than hitting your savings goals and having money available when you need it most.
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