The month of April is known for practical jokes and pranks on the unsuspecting. The month of April also has a serious side and it is no joke. Since 2004, April has been known as Financial Literacy Month with a focus on financial education. Learning how to manage money for college students and families on a strict budget is a lifelong commitment. Here are a few stats on how some of us handle money:
- 4 out of 5 U. S workers live paycheck to paycheck
- Over a quarter do not save any money from month to month
- At least 75% have some form of debt and will continue to be in debt
In light of the statistics, it is important for students and those of us that work in the educational space to embrace financial literacy. If you are like me you are thinking, what is financial literacy? It means that you understand how money works which allows you to make smart decisions related to finances.
Now I am thinking, we all would love to make better and smarter decisions regarding money, so how?
There are a few tips you can use:
- Budget, Budget, Budget - You need a plan to keep track of money that comes in and goes out each month. You do not have to track every dollar but should know how you earn, save, and how much you spend on rent, utilities, food, gas, and entertainment. There are plenty of online resources to help students with budgeting and how to get started. (You had to know that this was going to make the list!);
- Avoid the Plastic - The question you need to ask yourself is, "Do I spend now and pay later?" Try with all of your might to avoid charging your expenses. In the end, it will cost you more. Think of the finance charges and interest!;
- Spur of the Moment - Resist the initial urge to impulse buy. This will lead to unnecessary spending that was not in the budget and you have boomeranged back into debt;
- Conquering your Debt – It might seem like you have Himalayan-size debt. Try paying off the little debts first. Conquering the smaller debts will give you the confidence to scale the larger ones; and
- What is the score? - You will need to keep an eye on your credit score. Your credit score is like a grade given to your credit report. Every year you can request a free credit report to ensure that you are aware of all of the credit in your name. The annual credit report will not contain your credit score (that will cost you) but will let you know what is on the reports. Check out Get My Free Credit Report website.
Financial literacy is important because it allows you to secure your future and provides knowledge and skill to manage your finances.