The Need for a Financial Education Guide
Money, budget, debt. For many people these words trigger immediate stress and anxiety. Then questions come. Do I make enough money? How do I start to make a budget? How can I get out of debt? Can I learn to manage my money and expenses? Will it be worth it?
Let me begin with this, having stress and anxiety is ok. We all experience it at some point. Second, with time you can answer all your money questions, build your confidence, and reduce your stress regarding your finances.
Since April is Financial Literacy Month, below is a mini financial education guide on key financial topics to know.
Think of your budget as an empowerment tool versus as a negative. The first step in starting a budget is to know what you spend. A good place to start is to track all your monthly expenses for at least 30 days. Choose a method that you are most comfortable with: pen/paper, spreadsheet, or a budgeting app.
With the tracking information in hand, you will account for your monthly income, regular monthly expenses such as mortgage/rent, phone, and utilities bills. The monthly budget needs to also include groceries, insurances, family expenses.
Once you have tracked and compiled your expenses and income, you can then form the next steps to reach your financial goals.
2. Building Savings
The second financial topic to know is the importance of savings. Savings help reach your financial goals once the budget is reviewed. It also can help you plan for unexpected savings when an emergency happens. Planned savings could include saving for a car, furniture, or a vacation. While emergency savings is money set aside for an unexpected event–e.g. health issue, job loss, a major car repair.
With savings, you can start small. Don’t stress about the final amount when you are saving. Begin by putting away an obtainable amount every week, month, pay period to get in the habit of saving. As expenses or income change, consider changing the amount you save every month. This could increase or decrease depending on the situation. The most important part is to keep saving.
3. Reducing Debts
Next up is reducing your debts. With debt reduction it opens future possibilities. It saves money over time as you shorten the time and amount paid in interest. It reduces your overall monthly expenses once paid off. This allows more money to be put in savings for future goals. There are several strategies to lower debt on your own, debt snowball and debt avalanche. In both options, you put all excess funds towards one debt at a time while paying the minimum on everything else. Once the debt is paid off, you take that amount you were paying a roll it into the next debt owed.
Starts with paying off the smallest debt first, regardless of interest rate. It is most rewarding because you can see your debts paid off sooner. Since it shows faster progress, many people find it’s easier to stay motivated.
Starts with the highest interest debt first. This saves the most money over time as you pay less in interest, but it takes longer to show results. However, once the initial large interest rates are paid off, it moves quickly.
If you want more support or structure to pay off debt, consider a Debt Management Program with Apprisen. This debt repayment program offers lower interest rates and one monthly payment to pay off debts. People usually complete the program within 3-5 years.
4. Building Credit
My final topic for this mini financial education guide is credit. Building healthy credit allows more opportunities in reaching financial goals as well. Credit is an integral part of your financial life and health. Credit scores determine whether you get approved for a mortgage, a credit card or some other line of credit and the types of interest rates you’ll pay. Some employers even look at credit when offering positions. An important part to know about credit is its always changing. With time and effort, it can grow (or decrease too, if you’re not careful). Credit builds by making your payments on time and keeping balances low.
Check out our credit health education session for a deep dive into your personal reports and strategies to help build healthy credit.
In conclusion, remember managing and improving your finances does not have to be a scary topic. It opens many doors as you gain confidence in it. For additional resources you can follow us via TikTok, Facebook. and Instagram.