Why everyone should be Financially Literate

Money is a vital part of the lives of many people. It is important that everyone is financially literate. 

Don’t rely on others

Some married people and others in relationships allow the other party to deal with their finances, but it is important for both parties to be aware what their financial situations are. Even if one pays the bills and other duties, it is important to have regular meetings to make sure you are on the same page with your finances and goals.  

It is also important that both parties realize how much money there is to spend on certain things. In some cases, one is out overspending and the other is over stressed trying to make the money stretch to cover all of the expenses.

In the past, when many more women were not in the workforce it was more common for them not to be a part of the financial lives of their families. But when their spouses died, they were in the dark on their finances and since most did not have college educations or work histories it was even more difficult to keep afloat. 

Understand credit

Many people, especially younger people entering the workforce discover it is fairly easy to get into trouble with credit. It is important that they know about interest rates and finance charges. Many think that if they are able to make the minimum payments on their accounts that they are doing okay.  Actually, if you are only making the minimum payments, in most cases you are barely paying the amount of interest and finance charges and making very progress towards paying off the principal 

Almost anything can be purchased on monthly payments, from cars to home appliances. It is important to not get too many of these “low” monthly payments than you can afford each month. 

Wants vs. needs

Spending money is a necessity, but it is important to know the difference between wants and needs. You need a vehicle but do you need the largest and most expensive? You need clothes, but do you need the most expensive? One way to keep your spending in check is to track your spending. For a week, or preferably a month, keep track of everything you spend money on. Then you can look at where your money has been going and if there are areas that you can cut back on or cut out completely.

Pay yourself first

Besides paying others for goods and services, it is also important to pay yourself. A certain amount of each paycheck should be put aside for savings before you start paying other bills. 

It is important for everyone to be financially literate.