Beyond financial literacy: what you need to achieve with your money

April is Financial Literacy Month, designed to promote greater financial understanding among children and adults. So far, More than half of Americans get worried Just thinking about their finances.

Why are so many adults stressed about money? This is partly because managing money is complex. Understanding the basics of budgeting, savings and even compound interest rates is a good start. But financial literacy is not enough – you also need financial capability, financial well-being and financial flexibility. Here’s how to get them.

Make financial education a family value

Managing money used to be relatively simple. Before 2000, many companies offered employee pensions, and fewer financial apps and options existed. As employers moved to 401(k) plans, the burden of financial planning shifted to the employee. Combined with credit and debit cards, financial apps, loan options, and growing consumer debt, it’s no surprise that most adults are concerned about money management.

Because the economic climate has changed, Americans must challenge long-held assumptions about personal finance. To begin with, make financial education an integral part of family values. Talk to your partner and children about money principles and best practices. Maybe your kids manage the household expenses for the day or encourage a family member to look into the investment idea and explain their reasoning behind your decision.

Create a Financial Wellness Checklist

Financial well-being today is the ability to live comfortably and still have the means to support oneself. Like physical health, financial wellness requires regular upkeep and check-ups to ensure that you are on the right track. Here are questions to ask yourself:

  • Am I saving enough money for emergencies?
  • Am I spending more than I earn?
  • What is my credit score? How Can I Improve It?
  • How Much Are My Retirement Savings Worth Today?
  • do I have disability protection What if I can’t work?
  • Is my life insurance coverage enough to cover my family?
  • Do I have a will, and is it up to date?

A financial plan isn’t something you “set and forget.” It is always a good idea to do a financial wellness check when you have a change that could affect your finances, such as getting married, having children, changing jobs or receiving an inheritance. But you don’t need a major event to make sure you’re in good financial shape – reviewing your checklist annually can help you stay on track and up to date with the current economic environment.

encourage and advise each other

Financial literacy is one such skill that can help us make better decisions about money. But financial growth and wellness tools are not equally available to everyone, making it difficult for friends, family members or loved ones to thrive financially.

The difference between what we are being taught and what we need to do to achieve financial well-being is even more apparent when you consider that most people “don’t even know” that they don’t know how to manage their finances. How to do.

Families, friends and communities should encourage and mentor each other to improve financial literacy and health. Groups can:

  • Share information and financial experiences.
  • Help others better understand how to navigate the economy.
  • Let people with similar goals or interests come together.
  • Create a safe space to discuss possible solutions for personal financial development.

Also, don’t discount hiring a financial professional – it’s not just for the wealthy. Many middle- and low-income people can also benefit from financial planning. If you choose a Certified Financial Planner™ professional (CFP®), they have a fiduciary duty To you. Many operate on a fee-only basis, which means the decisions they make should be in your best interest and not based on the commission they can earn.

build financial flexibility

Being financially literate does not make you immune to the economic system around us. Too many financially literate people can adversely affect their finances by things beyond their control – this is where financial flexibility comes into play.

financial flexibility There is the potential to bounce back from unforeseen events like losing your job or getting hit with a significant expense. This means you have enough money in a savings account to handle emergencies and have access to the information and help you need in case something goes wrong. Here are some things you can do to strengthen your financial resilience:

  • Set financial goals. Make sure they are realistic but keep them high enough that they inspire you.
  • Have a budget Track where your money goes and make sure you don’t overspend in any one area.
  • Build an emergency fund. You want a rainy day fund that will cover at least six months’ worth of living expenses.
  • Pay off your debt. If you have any high-interest debt — such as a credit card or payday loan — pay it off quickly.
  • Know where your money goes. It’s easy to get caught up in day-to-day expenses. But keeping track of where and how you’re spending can help you stay on track.

While American adults generally understand basic financial concepts, many still find themselves in precarious financial situations. with 78% of US workers are living paycheck to paycheckIt is clear that financial literacy is a problem.

Here’s the good news: A little financial planning can go a long way. By taking a few small steps now, you can put yourself on the path of being competent and flexible with your finances.

CEO, Blue Ocean Global Wealth

Margherita M. Cheng is the Chief Executive Officer blue ocean global wealth, She is a CFP® Professional, a Chartered Retirement Planning Consultant, a Certified Retirement Income Professional and a Certified Divorce Financial Analyst. She helps educate the public, policy makers and the media about the benefits of efficient, ethical financial planning.

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