Financial Literacy is the knowledge that enables you to make wise financial plans, it is Economic Security, and Financial Freedom, so you can break free from poverty and have a higher quality of life. It includes budgeting (spending plan), healthy spending (not living outside your means), investing, Retirement planning, and more.
Building and/or improving your credit – this is very important. The choices you make today, will follow you for years to come. Your credit score will affect the type of car you are able to drive, the interest rate you get on the loan for that vehicle, and the insurance rate you must pay to drive that vehicle. Another area of your life that your credit score affects is your living situation; to rent or being a homeowner, what zip code you can afford to live in, how much you will pay for insurance on the house or for renter’s insurance. Credit should be as sacred as a marriage.
The 50-30-20 Rule:Â
50% of your income goes towards your NEEDS (Mortgage/shelter, Vehicle, Food, utilities, etc.)
30% of your income goes towards your WANTS (Entertainment, Dining out, travel, etc.)
20% of your income goes towards your SAVINGS (Emergency Fund, Retirement, etc.)
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Financially Responsible – Spend less than you earn, save for the future and emergencies, and pay your bills on time. Just because you have checks left in the checkbook, does NOT mean you have money in the bank!  Being financially responsible has long-term benefits and should be taught to young people long before High School.
If you cannot control your spending, steer clear of credit cards (stick with a debit card that immediately withdraws from your account). One way that I face temptation to make purchases, is to walk away, and if I still want something 30 days later, I will go back to purchase it.
How to save money – VISUALIZE YOUR GOALS. What are you saving for? What do you need to make it a reality?Â
Make a spreadsheet that includes your monthly income and all your bills (NEEDS). Don’t forget to pay yourself (SAVINGS), and if nothing is left over – there’s a good chance you are living outside of your means, which means that your WANTS must wait until you get yourself into a better financial situation.
Liabilities = Things you owe $$ for (Debts, Student Loans, Credit Card debt, etc.).
Assets = Things you own (Investments, savings, Equity in a home, etc).
Net Worth = Assets minus Liabilities.
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Having the confidence, knowledge, and skills needed to make sound financial decisions will have a direct impact on financial self-sufficiency, stability, and well-being. Knowing how to research and effectively locate, evaluate, and use information, resources, and services to make informed decisions about financial obligations, budgeting, credit, debt, and planning for the future, are the financial literacy skills required to set yourself on a path towards a healthy financial future.