The term "financial literacy" is gaining in popularity. Financial magazines, blogs, and newsletters urge us to increase our financial literacy, or else. Financial surveys tell us which states have the most and least financially literate residents. And the federal government has labeled us financial illiterates.
You do need to know something about finances. Learning to eliminate your debt and increase your savings is very important. Knowing a lot of complicated financial terms and concepts is not. Besides, the financial types will keep adding new terms, products, and theories to your need to know list. There is no catching up with these folks.
Just because the financial industry continues to get more complicated, does not mean you are a financial illiterate. According to most definitions of the term, our grandparents were not financially literate. However, our grandparents were very good debt avoiders and savers, and we can be too.
The most important thing you can do to be financially fit is reduce or eliminate debt. Unless you are rich, you will probably need to borrow money at some time in your life. Borrowing in and of itself is not a bad thing. Borrowing more than you can afford to pay back or to purchase the wrong thing is bad.
If you want to reduce the amount you owe and avoid future debt, you need to learn to live within your means and to delay gratification. You also need to learn what items are worth purchasing with credit and which are not. There are many easy to follow tips you can use to get and stay out of debt. MORE→
Another important thing you can do to be financially fit is to save. Unless someone you know is rich, you need to have an emergency or rainy day fund. This is the fund you tap when you lose your job or have unexpected medical expenses that are not covered by insurance. You also need to save to meet your short, intermediate and long to financial goals.
When trying to save, always have a goal in mind. What are you saving for? Once you know what you are saving for, you need to set a timeline to achieve it. If you do not know what you are saving for and do not set a timeline to build your savings, chances are you won’t save at all. MORE→
Financial calculators may make you think of complicated math that is beyond your understanding. They are not. Today’s financial calculators include an explanation for each required item and take just seconds to return a simple result.
There are financial calculators to calculate just about every financial situation. You can calculate the cost of buying a home, paying for college, estimating taxes and retirement savings needs, increasing savings and reducing debt. These calculators are available on bank and other financial web sites or as mobile applications.
You do not have to spend time memorizing complex financial terms and concepts, but understanding the basics is a good idea. And what are the basics? If you don't know what the FICA deduction on your pay stub represents, how to fill out the Form W-4, or the difference between pre-tax and tax-free, you need some help with the basics. Our tools and things can help you learn the things you need to know, and nothing more. MORE→