April is National Financial Literacy Month and it is a good time to commit to your financial future. As part of National Financial Literacy Month, learn how to establish and maintain healthy financial habits. A Personal Budget is a good start to achieve your financial goals. It is part of the planning process. The following are the most important skills that everyone should learn:
Budgeting
A personal budget is a financial plan that allocates personal income towards expenses, savings and debt repayment. It is a structure to reach your financial goals. Goals can be reducing debt, saving for retirement or saving for a vacation.
- Assess your personal and financial situation (needs, values, life situation).
- Set personal and financial goals.
- Create a budget for fixed and variable expenses based on projected income.
- Monitor current spending (saving, investing) patterns.
- Compare your budget to what you have actually spent.
- Review financial progress and revise budgeted amounts
Making financial decisions
Decision-making skills are something we use every day. It ranges from what I should wear to much more complex decisions concerning buying a car or home. What factors should you consider when making a financial decision? Here are five (5) factors.
- Identify the problem
- Gather information and list possible alternatives
- Consider consequences of each alternative
- Select the best course of action
- Evaluate the results
Saving and Investing
Saving and investing are cornerstones of financial management. You should establish and maintain a budget with clear and specific financial goals and understand all of their investment options. If you invest as little as the cost of lunch once a week, you can see what kind of results achieved in ten (10) years.
Save this each week … at % interest … in 10 years you’ll have:
$7.00 5% $4,720
14.00 5% $9,440
21.00 5% $14,160
28.00 5% $18,880
35.00 5% $23,600
Credit Cards
Before you start to use credit cards you should understand the advantages and disadvantages of credit cards. Here are some of factors which are different with each credit card.
- Annual Percentage Rate (APR)
- Grace period
- Annual fees
- Transaction fees
- Computation method for the finance charge
Buying a Home
Buying a Home requires some thoughtful planning and know-how. Home buying includes a mortgage and financing..
Determine home-ownership needs
- What type of housing should I buy?
- How much can I afford to spend?
Locate and evaluate a home
- Where do I want to live?
- What aspects of the home need improvement?
Price the property
- What is an appropriate market price?
- How much negotiation movement exists?
Obtain financing
- How much down payment is available?
- What are current mortgage rates?
- Can I qualify for a mortgage?
- What type of mortgage should I get?
Awareness of your current financial status is the starting point of a personal financial plan. Short term, intermediate and long term goals are based on your current financial position. Decide what actions need to be taken regarding spending, saving, using credit, buying insurance, making investments, and planning for retirement. Budgeting, making financial decisions, saving and investing, credit cards and buying a home are important factors in everyone’s life. What skills do you need to learn? What skills do you need to improve? What are you doing about it? National Financial Literacy Month is a good time to think about your personal finances!
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I’m glad to see that there is a financial literacy month. This is one subject that I feel is really lacking in our schools. Senior year of high school students should be learning about credit cards, student loans, mortgages, and investments. Its amazing how few people even understand the time-value of money.
I sincerely hope that those in a position to help with financial literacy are making the best of this month.
As a teacher of personal finance,I really believe in financial literacy. Unfortunately,there is considerable pressure to teach core subjects. Electives are a luxury in a tight education budget despite students getting so much out of it. It is up to parents to teach it or demand it frm educators!
From my point of view, financial literacy should be a core subject, not an elective. I’d like to see some personal finance lessons incorporated into fundamental subjects such as math.
It could be part of common core, however it is is absent. I am currently teaching economics and I included a personal budget. To me, it is the ultimate applied economics!