What does this mean?
Why is it important to you and your family?
Financial Literacy is the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turns it into more) and how that person donates it to help others.
The keys to managing your money include:
Pay yourself first.
- Before you spend one dollar on rent/mortgage, car payment, credit cards or any other bill, set aside $10 out of every $100 or ten percent of your take home pay.
- Make savings automatic by setting up direct deposits.
Build an emergency savings fund.
- Experts agree that three to six months of your monthly living expenses is the ideal. However, for most people that is not possible but almost anyone can manage to set aside $200-$500.
Reduce your spending leaks.
- Many of us spend money on things that are not necessary to life. Think of stopping for coffee, sweet tea or soda and of course fast food. If you reduce some of those items, you can put money you are already spending into your emergency fund. Spending Leaks Worksheet
Talking about money with your family
It is vital that families begin talking about money while children are young to help them be ready for the challenges they will face as adults. Make it simple and age appropriate. Pointers for Parents at Every Stage
- Make the concept of money real by showing youth how much things cost like your electric or cable bill.
- Show them an ATM machine and explain how you have to put money into your account from working so you can have cash when you need it. Bring them inside your financial institution for a tour and to take some of the mystery out of what happens there.
- Use going to the grocery or retail store as way to show them how much things cost, to compare prices and when older, what discounts and clearance items are all about.
- Involve your children in budgeting by planning a family activity that will require them to give up something like a trip to McDonalds or the movies to save for an activity that will leave a memory.
Increasing your own financial knowledge
At the Center for Smart Financial Choices (CFSFC) we help individuals find out what their habits and attitudes are towards money and the things they value most in life. Then, we guide them to accomplish the goals they desire and fulfill our vision of “Helping people build assets leading to a comfortable financial future for them and their family.” We offer this assistance to adults through a Financial Wellness Checkup.