In today’s world, there’s a dedicated day to celebrate just about everything: from ice cream and coffee to Pi Day and World Introvert Day. But there’s one special day that we financial advisors are really fond of and it’s coming up on August 14: National Financial Awareness Day.
National Financial Awareness Day gives us even more of a reason to highlight why financial literacy is important for everyone.
What is Financial Awareness?
Financial awareness is knowing the state of your finances at any given time. It’s a working understanding of your income and expenses, knowing how to budget, track expenses, save for emergencies, and invest for the future. Financial awareness also involves taking the time to understand certain financial concepts and terminology so you can make confident financial decisions.
Why Is Financial Literacy Important?
Being financially aware can impact your life for the better. Your finances touch every single area of your life. When you’re financially aware, you have a better handle on the money you make and spend, you’re more at peace and more prepared for the days ahead. But like most things in life, no one is born with financial awareness. It’s something you have to pursue, learn, and apply to your own life on a daily, weekly, and monthly basis.
7 Steps to Becoming More Financially Literate
You’ve probably heard the old saying, “Practice makes perfect,” right? Well, the same is true for your finances. The more you learn about budgeting, saving, investing, and avoiding debt, the more you’ll be able to put it into practice. Here’s how you can get started:
1. Get on a budget.
Keeping a budget doesn’t seem like you’re doing much, but it’s one of the most important tools in your financial toolbox. Use a pen and paper or download a simple zero-based budgeting app like Mint, YNAB (You Need A Budget), or EveryDollar to help you get started.
2. Track your expenses.
Tracking your spending weekly will give you more insight into how you spend your money, where you’re busting your budget, and what changes you can make to get back on track.
3. Live on less than you make.
A budget also helps you determine how much money you’re bringing in versus how much money you’re spending each and every single month. Knowing if you’re spending more money than you’re making can take you from living in debt to actually building wealth.
4. Save for emergencies.
Life has a way of throwing curveballs at you when we least expect it. And those curveballs can get pretty expensive—fast. Saving up an initial $1,000 and setting it aside just for life’s emergencies is crucial to your financial health. So, the next time the AC goes out in the middle of summer, you’ll be able to cover most of the cost instead of putting it on a credit card.
5. Plan for retirement.
Retirement is something that everyone experiences, but not everyone experiences the same retirement. In fact, 75% of people in the pre-retirement phase haven’t calculated how much they’ll need in retirement.1 It matters how you plan and prepare for it. Talk to a SageSpring Wealth Partner to start planning for your future today.
6. Keep tabs on your credit score.
One of the easiest ways to keep tabs on the health of your credit activity (and to prevent fraud) is by keeping an eye on your credit report. It’s best to look at your report once or twice a year to make sure your activity is actually yours. If you find something odd, make sure to dispute it and get your record cleaned up. Get your free report here.
7. Ask for help.
Another way to increase your financial literacy is by going to the experts. Asking a financial advisor to join your home team is a great way to learn how you can strengthen your financial foundation, increase your knowledge, and prepare for the future.
Ready to increase your financial awareness? We can help. Contact a SageSpring Wealth Partner in your area today.