April is designated as Financial Literacy Month in the U.S., so I thought this topic would be fitting for the blog today.
Financial literacy is the ability to understand personal finance and economics and in turn be confident in making financial choices for one's self to achieve your goals.
Most people recognize that finances are important for personal well-being as well as the well-being of an entire family unit. However, it seems all you hear about the younger generations is how wasteful we are with money or how most of us are not interested in learning about finances.
A 2018 study conducted by Charles Schwab about financial literacy in young adults found that the average young adult owed around $8,000 in debt, used their parents as their primary source for financial information and were not financially independent but it was their top goal.
Another study conducted by Charles Schwab back in 2009 found that 2/3 of young adults in the study considered financial fitness more important to them at the moment than physical fitness. About the same amount of young people ranked financial priorities such as eliminating debt more important than things such as getting a car or paying for graduate school.
These studies show that young adults are interested and see the importance of financial literacy; but they don’t always know where to start when trying to learn.
First off test your own knowledge with this short quiz:
http://www.usfinancialcapability.org/quiz.php
Now watch this video and read a bit of this article to see how peers around your age answered the same types of questions:
https://www.cnbc.com/2017/09/19/94-percent-of-americans-failed-this-financial-literacy-quiz.html
Where to start? Personal Finance!
Step 1: Savings
Check out some of my previous posts on this blog to learn some basics about financial literacy such as how to budget, best types of savings accounts, and how to understand retirement plans.
- Create a budget if you do not already have one
- Determine if you have the best type of savings account for yourself
- Invest in your future self with company sponsored retirement plans!
Step 2: Debt
Look at credit card statements, student loans, car loans, ect. and determine the best way for you to pay them off.
Step 3: Goals
What are you future goals? Is it to have your own, a specific car in the future, or maybe you want to start your own business! Start saving now! Build up an emergency fund and start building up money towards your personal goals.
What’s Next? Further Your Knowledge
Next, use some of the resources listed below to begin learning about other topics to improve your financial literacy further. Find a topic that interests you, you think would be personally beneficial, or just something you have heard a lot about and have questions on. The more you know, the better off you will be.
Resources:
Beginners’ Guide by National Endowment for Financial Education:
Resources for College age and Beyond for Financial Literacy Month:
- Some of these are free and some are not, price is listed right next to the quick look link for each
2009 Study
https://www.schwabmoneywise.com/public/file/P-4065778/
2018 Study Results
https://www.schwabmoneywise.com/public/moneywise/tools_resources/literacy_survey