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What Is Financial Literacy?
Being able to manage your money effectively is a skill that often comes after having to learn it the hard way. Understanding how to borrow and save money, pay your bills, and plan for retirement are all important life-long lessons. Taking the initiative to learn and educate yourself on financial topics will increase the likelihood of establishing good habits that will benefit you and your family throughout your life.
What Does Financial Literacy Mean?
Financial literacy involves having strong knowledge of financial concepts like investing, and saving, and knowing how to use these concepts to improve your financial wellbeing.
Just like physical health, your financial health matters. With financial literacy, you’ll be at the helm of your money management.
A good first step to gaining financial literacy is educating yourself on common financial terms and how the financial system in the U.S. operates. Books about finance and money management are a good place to start, as they’ll build up general knowledge about how to spend money wisely, and comprehension of why learning about money is important.
What It Means to Be Financially Literate
Being financially literate involves taking control of your money and setting and achieving financial goals.
Beyond just knowing how to manage your money, financial literacy involves being able to find and allocate money to multiple investments and saving opportunities.
As a parent, you can simultaneously save for your child's college fund, set up a retirement plan, and create an emergency fund while still having enough money to provide for yourself and your family.
Why Is Learning About Money Important?
A good answer to the question "why is learning about money important" is that it gives you control over the financial aspect of your life. You can confidently manage your money, and you’re better equipped if any financial issues arise.
For example, imagine you lose your job and are unable to provide for your family or pay your monthly fees. As a financially literate person, these problems are things you foresee. That's why you set up emergency funds and debt repayment funds in case a financial emergency ever arises for you or your family.
Financial literacy also ensures that you always know what is happening with your money and reduces your risk of fraud.
Key Topics in Financial Literacy
A lot more than being able to answer why is learning about money important goes into becoming fully financially literate. Here are some of the key topics in financial literacy that you should understand;
Budgeting
The average American spends around $314 every month on impulse buying. And this number continues to grow. Budgeting ensures that you only spend on things you and your family need. This way, you have enough money to put into your savings and investments.
You need to be realistic when setting a budget. First, write down your monthly income and the various savings you have. Next, allocate money to each goal in order of importance.
Emergencies
Emergency financial situations can happen to anyone. Perhaps you lost a big investment or had your working hours reduced and are low on funds.
As someone that is in control of their finances, you need to think ahead and create emergency funds in case this ever happens. You’re also less likely to find yourself with no money when you're smart about your investments.
Debt Management
Financial literacy teaches you how to make smart investments, be wise about your transactions, and reduce the chances of falling into debt. Should you find yourself indebted to a person or a financial institution, having a debt repayment fund will ensure you escape that situation easily, without damaging your credit score.
How to Become Financially Literate
Now that you have a grasp on what financial literacy is and can answer why is learning about money important, here are some steps to help you become financially literate;
Check Out Free Resources
The first step to becoming financially literate is using the free resources already available to you. Many banks and credit unions provide a number of tools and resources to their customers that are free of charge. For example, PFCU blog is full of valuable information on a number of financial topics from improving your credit to how to apply for a loan. We also provide a Money Management tool available in Online and Mobile Banking to help members budget, set goals and keep track of spending.
Credit and Financial Literacy
The next step involves building your credit score. With a good credit score, you’ll have better financial offers from your bank or credit union. The best way to improve your credit score is to pay your bills on time.
To check your credit report, you can request a free annual copy from AnnualCreditReport.com. Review your credit history and take this opportunity to make improvements or dispute incorrect information on your credit report.
Power Financial Credit Union is Here for You
We treat our customers as family at Power Financial Credit Union. Our purpose is to guide our members to better financial lives now and for generations to come. That means we are always here to help our members reach their financial goals faster. If you’re interested in learning more about Power Financial Credit Union and how we can help you on your financial journey, contact us today.
What Is Financial Literacy?
Being able to manage your money effectively is a skill that often comes after having to learn it the hard way. Understanding how to borrow and save money, pay your bills, and plan for retirement are all important life-long lessons. Taking the initiative to learn and educate yourself on financial topics will increase the likelihood of establishing good habits that will benefit you and your family throughout your life.
What Does Financial Literacy Mean?
Financial literacy involves having strong knowledge of financial concepts like investing, and saving, and knowing how to use these concepts to improve your financial wellbeing.
Just like physical health, your financial health matters. With financial literacy, you’ll be at the helm of your money management.
A good first step to gaining financial literacy is educating yourself on common financial terms and how the financial system in the U.S. operates. Books about finance and money management are a good place to start, as they’ll build up general knowledge about how to spend money wisely, and comprehension of why learning about money is important.
What It Means to Be Financially Literate
Being financially literate involves taking control of your money and setting and achieving financial goals.
Beyond just knowing how to manage your money, financial literacy involves being able to find and allocate money to multiple investments and saving opportunities.
As a parent, you can simultaneously save for your child's college fund, set up a retirement plan, and create an emergency fund while still having enough money to provide for yourself and your family.
Why Is Learning About Money Important?
A good answer to the question "why is learning about money important" is that it gives you control over the financial aspect of your life. You can confidently manage your money, and you’re better equipped if any financial issues arise.
For example, imagine you lose your job and are unable to provide for your family or pay your monthly fees. As a financially literate person, these problems are things you foresee. That's why you set up emergency funds and debt repayment funds in case a financial emergency ever arises for you or your family.
Financial literacy also ensures that you always know what is happening with your money and reduces your risk of fraud.
Key Topics in Financial Literacy
A lot more than being able to answer why is learning about money important goes into becoming fully financially literate. Here are some of the key topics in financial literacy that you should understand;
Budgeting
The average American spends around $314 every month on impulse buying. And this number continues to grow. Budgeting ensures that you only spend on things you and your family need. This way, you have enough money to put into your savings and investments.
You need to be realistic when setting a budget. First, write down your monthly income and the various savings you have. Next, allocate money to each goal in order of importance.
Emergencies
Emergency financial situations can happen to anyone. Perhaps you lost a big investment or had your working hours reduced and are low on funds.
As someone that is in control of their finances, you need to think ahead and create emergency funds in case this ever happens. You’re also less likely to find yourself with no money when you're smart about your investments.
Debt Management
Financial literacy teaches you how to make smart investments, be wise about your transactions, and reduce the chances of falling into debt. Should you find yourself indebted to a person or a financial institution, having a debt repayment fund will ensure you escape that situation easily, without damaging your credit score.
How to Become Financially Literate
Now that you have a grasp on what financial literacy is and can answer why is learning about money important, here are some steps to help you become financially literate;
Check Out Free Resources
The first step to becoming financially literate is using the free resources already available to you. Many banks and credit unions provide a number of tools and resources to their customers that are free of charge. For example, PFCU blog is full of valuable information on a number of financial topics from improving your credit to how to apply for a loan. We also provide a Money Management tool available in Online and Mobile Banking to help members budget, set goals and keep track of spending.
Credit and Financial Literacy
The next step involves building your credit score. With a good credit score, you’ll have better financial offers from your bank or credit union. The best way to improve your credit score is to pay your bills on time.
To check your credit report, you can request a free annual copy from AnnualCreditReport.com. Review your credit history and take this opportunity to make improvements or dispute incorrect information on your credit report.
Power Financial Credit Union is Here for You
We treat our customers as family at Power Financial Credit Union. Our purpose is to guide our members to better financial lives now and for generations to come. That means we are always here to help our members reach their financial goals faster. If you’re interested in learning more about Power Financial Credit Union and how we can help you on your financial journey, contact us today.