Beyond Financial Literacy: What You Need to Win with Your Money

April is Financial Literacy Month, designed to promote better financial understanding among children and adults. Still, more than half of Americans become anxious just thinking about their finances.

Why are so many adults stressed about money? This is partly because money management is complex. Understanding the basics of budgeting, saving, 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 resilience. Here’s how to get them.

Make financial education a family value

Money management was relatively simple. Before 2000, many companies offered pensions to employees, and there were fewer apps and financial options. As employers transitioned to 401(k) plans, the burden of financial planning shifted to the employee. Combined with the onslaught of credit and debit cards, financial apps, loan options, and growing consumer debt, it’s no surprise that most adults feel anxious about managing their lives. ‘money.

Because the economic environment has changed, Americans need to question long-held assumptions about personal finance. To start, make financial education a part of family values. Talk to your partner and children about money principles and best practices. You could ask your children to handle household expenses for the day or encourage a family member to consider an investment idea and explain the reasoning behind their decision.

Create a financial wellness checklist

Financial well-being is the ability to live comfortably today while having the means to support oneself. Just like physical health, financial well-being requires regular maintenance and reviews to make sure you’re on the right track. Here are the questions to ask yourself:

  • Am I saving enough money for emergencies?
  • Am I spending more than I earn?
  • What is my credit rating? How can I improve it?
  • How much are my retirement savings worth today?
  • Do I have disability protection if I can’t work?
  • Is my life insurance coverage enough to support my family?
  • Do I have a will and is it up to date?

A financial plan is not something you “set and forget”. It’s always a good idea to get a financial health check when you have a change that may 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 keep you on track and up to date. current economic environment.

Encourage and mentor each other

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

The gap between what we’re taught and what we need to do to achieve financial wellness is even more apparent when you consider that most people “don’t even know” they don’t know how. manage their finances.

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

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

Also, don’t overlook hiring a finance professional – it’s not just for the rich. Many middle- and low-income people can also benefit from financial planning. If you choose a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional, they have a fiduciary duty to you. Many operate on a paid basis, which means the decisions they make should be in your best interest and not based on the commission they might earn.

Building Financial Resilience

Having financial knowledge does not make you immune to the economic system around us. Many financially literate people can have their finances affected by things beyond their control – this is where financial resilience comes in.

Financial resilience is the ability to bounce back from unexpected events, such as losing your job or a major expense. This means that you have enough money in a savings account to deal with emergencies and that you have access to the information and support you need if something goes wrong. Here are some things you can do to build your financial resilience:

  • Set financial goals. Make sure they’re realistic, but set them high enough to motivate you.
  • Have a budget. Keep track of where your money is going and make sure you don’t overspend in any area.
  • Build an emergency fund. You want a rainy day fund that will cover at least six months of living expenses.
  • Pay off your debt. If you have high-interest debt, like credit cards or payday loans, pay them off quickly.
  • Know where your money is going. It’s easy to get caught up in day-to-day expenses. But keeping tabs on where and how you’re spending can help keep you on track.

While American adults generally understand basic financial concepts, many still find themselves in precarious financial situations. With 78% of American workers live paycheck to paycheckit is clear that financial literacy is an issue.

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 to being capable and resilient with your finances.

CEO, Blue Ocean Global Wealth

Marguerita M. Cheng is the General Manager of The Global Wealth of the Blue Ocean. She is a CFP® Professional, a Certified Retirement Planning Consultant℠, a Certified Retirement Income Professional, and a Certified Divorce Financial Analyst. She helps educate the public, policy makers and the media on the benefits of competent and ethical financial planning.