The Benefits of Financial Literacy
If you are not sure what financial literacy is, then you are not alone. Many Americans are unable to define what it is. Many folks do not understand how to learn about financial literacy.
According to statistics, 56 percent of Americans surveyed thought that they were only somewhat financially literate, while 15 percent said that they were not very financially literate at all.
Another survey found that despite 88 percent of people believing financial health was “extremely important,” most (66 percent) claimed to have only an amateur knowledge of money management.
Financial Literacy has been defined as "the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being." This is not just being able to add up your expenses every month or balance your accounts or checkbook, we are talking skills and an understanding of how your finances work and how to plan for the future as well.
Most people want to be financially stable. In fact, 26 percent of adults say that they are stressed about money most if not all of the time. If this is the case, something has to change. Folks need to be more financially literate and get closer to financial well-being.
The benefits of financial literacy are far-reaching. It can help people to manage their money better, to ensure that they prioritize their spending where it's needed most. It also helps them to avoid the burden of bad or unmanageable debt and safeguard themselves against risks to their financial security.
In practical terms, being financially literate can help you, or at least predispose you to save more, reducing debt, increasing your credit score, maintaining a budget, and so on.
Learning to be financially literate is the best way to make sure you have control of your finances. If you remember the old saying that knowledge is power, then you will realize that being able to know how money works and more importantly, how to make it work for you is invaluable. If you have no knowledge or understanding of finances, then taking a finance course or reading up online and getting as much information as you can is a good start.
Getting advice from a professional is one thing but actually understanding every nuance of what they are telling you is difficult if you do not understand how interest works or how an investment works or grows over time and when and how you will be able to access your money. If you are not financially literate or stable, you will end up being like one of the almost 80 percent of over 2000 people surveyed by the National Foundation of Credit Counseling in Washington who said they lose sleep over money.
Get as much knowledge as you can to be able to make certain that your financial future is under your control and not keeping you awake at night and stressing you out.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.