Are You Financially Literate?
● By Hood Magazine
Photo courtesy of Kristi Shanks Photography
By Kristi Robinson, Personal Finance Coach, Center for Financial Education, Canton
Financial literacy: the ability to understand how money works; the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.
Many Americans are insufficiently educated about their personal finances. A majority of consumers are experiencing some sort of financial difficulty - causing a significant impact on their everyday lives. In the U.S., we make great efforts to teach children to read and write, but we don't give their financial literacy the same attention. As a result, few people know how to manage their personal financial lives.
Financial literacy is more than just being able to balance a checkbook, compare prices, or get a job. It also includes skills like long-term vision and planning for the future, and the discipline to use those skills every day. Managing your money and not being managed by your money is the goal. Being educated about money helps us understand how to manage it. There are numerous resources that can help create a budget and a plan.
To understand the importance of being financially literate, it’s important to manage your finances. If your family is dependent on your garden produce feeding them, then you will want to know all there is about gardening. There are variables like soil, seed, fertilizer, water and sunlight. Oh, and don’t forget those weeds. When you start growing your garden you won’t just throw the packet of seeds at the ground and hope by luck they grow. It takes a lot more knowledge and organization than that to produce an abundant harvest. The same goes for your finances. When you just throw money here and there and hope by luck at the end of the month you have enough to feed your family, it doesn't work out. Finances take work and discipline.
“Winning at money is 80 percent behavior and 20 percent head
knowledge. What to do isn't the problem; doing it is. Most of us know what to
do, but we just don’t do it.” ~Dave Ramsey
Whichever way you choose to educate yourself about your finances doesn't matter. Everyone learns differently. What’s important is that you find something that works and stick with it. We suggest working with a counselor or finding an accountability partner to help you start winning with money.