The majority of people make various financial decisions on a daily basis. Some of them are quite savvy with their finances and manage to handle them properly, while others struggle to maintain their finances healthy.
According to a 2016 report provided by the Federal Reserve, more than half of Americans find themselves worried about their finances.
One of the main reasons is that the overall financial literacy is far from where it should be. Although we learn many things during our education, most of us were never taught how to deal with or manage our finances.
Sure, you may be aware of the fact that if you don’t mind your spending throughout the month, you’ll end up penniless halfway in.
On top of that, there are some financial challenges that are simply out of your control. However, if you work on improving your financial literacy, you’ll be able to make smarter financial decisions and always stay on top of your assets.
But before we move on to exploring the top 5 resources for starting your own financial literacy program, we must first talk about financial literacy itself.
What is financial literacy?
As the name suggests, financial literacy refers to being able to read and understand your finances. In other words, it is the ability to manage your financial resource effectively, based on your knowledge and skill, to ensure financial well-being.
Needless to say, the lack of this type of knowledge and skill will lead to the inability to make the right type of major financial decisions.
And because such major financial decisions often relate to opening the right type of banking account, planning for retirement or even purchasing a house, it becomes quite obvious why you should aim at broadening your knowledge base.
So, how does one improve their financial literacy? Luckily, there are various high-quality financial literacy programs you can join that will teach you some of the best ways to handle your finances.
But you can also try and do some of the work yourself by understanding how much money you have and how to make the best of it.
How to understand your paycheck?
To be able to make any financial decision, you first need to know how much money you have to work with. If you make a consistent income each month, figuring out this step shouldn’t be difficult.
However, if your income varies each month, this part can be a bit tricky. That said, you will still need to calculate either your minimum or your average monthly income in order to be able to determine how many assets you’ll have at your disposal.
It’s important to determine both your gross and net income to be able to start spending.
How to create a personal budget?
Once you know – or at least have a general idea of – how much money you’ll make, it’s time to focus on creating a personal budget. Keep in mind that personal budgets are usually very fluid, and they are more of an idea of what you intend to spend your money each month.
Of course, the amount of money you’ll be creating your budget with is the amount you’re left with after covering all of your mandatory expenses, such as bills, mortgages and other overhead costs.
Initially, you can rely on the 50/30/20 rule, where 50% of your net income is allocated to basic needs, 30% of it is set aside for nonessential expenses, and 20% should go towards your savings.
How to save money?
Being able to save up is extremely important. But many people struggle with learning how to spend less than they earn. In order to do this, you must first determine your financial goals. Ideally, these goals should be future-oriented, but they will mostly depend on your unique situation.
Therefore, consider making an emergency fund, think about your retirement, start saving for a big purchase – or vacation, or simply focus on covering your debts. By following the previously mentioned 50/30/20 rule, this step shouldn’t be too difficult to handle.
How to assess your financial literacy?
Now that we’ve discussed some of the most important questions related to financial literacy, it’s time to ask yourself whether or not you consider yourself to be financially literate.
If you’ve already been paying attention to some of the previously mentioned things, chances are you’re more financially literate than the majority of your peers.
However, if the answer is “no,” that means it’s time to roll up your sleeves and start learning all the ways you can improve your finances.
5 resources for improving your financial literacy
Finally, it’s time to discuss some of the best resources you can find if you’re looking to improve your financial literacy and start your own financial literacy program.
1. The Actuarial Foundation
Ever since 1994, when The Actuarial Foundation was created, they have been working on improving the overall public’s financial literacy.
Focusing on helping people across all income levels achieve a financial future, The Actuarial Foundation offers several free resources designed to help teach financial literacy.
“Building Your Future” is one of their best personal finance resources, consisting of 4 classroom-ready books, including a teacher’s guide.
Although the curriculum is aimed mostly towards a younger audience, mainly 4th-12th grade, anyone could find plenty of useful and practical information.
2. Your Life, Your Money
“Your Life, Your Money” is a resource offered by PBS. This amazing resource is not only super-helpful but quite entertaining as well. It consists of a series of videos hosted by Donald Faison that explore various topics related to saving, retirement, investing and getting out of debt.
PBS also offers other resources that include a facilitator’s guide and video transcripts, a glossary of financial terms, and links to relevant and reputable national financial organizations. Even though these resources are also mostly created for the younger audience, anyone could benefit from them.
The Federal Financial Literacy and Education Commission created the MyMoney.Gov. This website contains various useful resources different educators can use in their practice.
Additionally, there are resources that cater to various age groups, and those include curriculum, lesson plans, downloadable activities, online videos, slideshows and more.
With such an abundance of resources, improving your financial literacy will be easier than you may think.
Federal Deposit Insurance Corporation (FDIC) created the MoneySmart financial literacy resource, designed for people of all age groups.
MoneySmart offers various learning resources, as well as useful tools and strategies that can also be used to teach others.
MoneySmart also holds regular online webinars, but you will need to register for them in advance if you wish to attend.
5. National Financial Educators Council (NFEC)
The NFEC offers a chance to explore over 400 hours of financial literacy curriculum. The entire curriculum consists of subgroups that include various age-specific packages. So, it will be quite easy to find a curriculum you’ll be able to understand easily based on the age group you fall into.
Aside from the purchasable curriculum packages, NFEC also offers five free presentations on financial literacy.
To wrap up
All of us must work on improving our financial literacy, as learning more about our finances will help us manage them more effectively.
So, if you feel like your knowledge in this field is less than optimal, make sure you find a useful financial literacy program that will help you expand your knowledge and gain new skills that will help you keep your finances in order.