A few weeks ago I discovered a new podcast called, ‘The Planner and the Geek’. In one of their episodes, they mentioned that April was Financial Literacy Month. I had no idea there was a month dedicated to financial literacy and goals (though you should set a personal goal where you learn financial literacy every month). By definition, Financial Literacy Month is a month to highlight the importances of financial literacy and teach Americans on how to manage and maintain healthy finance habits.
This got me thinking, April has 30 days. Can I create 30 goals for each day to help myself be financially literate? Challenge accepted.
This should be easy, recognize April is ‘Financial Literacy Month’. Check!
Apply financial literacy every month, not just the month of April. With this, you help yourself be more aware of your finances.
Stay minimal. Clean out extra necessities. Focus on the basic needs. With this, its easy to track your spending – less records in general to keep track of. An example of this can range from minimizing the use of credit card companies (I have friends who have 15+ card) to minimizing food outings.
Be a leader of your finances. Do not let it control you. Tackle it. Write down every loan, debt, and credit card you have under your name (along with noting down your monthly income and spending in general). This helps keep small order for the next step.
Make a budget! Now that you have organized your finances, its easier to know where you are at. With this, you dedicate a plan. See how bit by bit this will start “trickling down” (I hope you understood that reference).
Since you are super organized, lets start with (what is my opinion) the number one problem in America. Debt. Let’s start with credit card debt, because it is easy to lose control of this. It is easy to lose control of this because you never see your money go in and go out. I always tell my friends and families to treat credit cards like debit cards. Always live below or within your means. If you have credit card debt, find out the one with the highest interest rate and make a plan to start paying that off ASAP.
You know your credit card debt (if you have any). My point is, this also helps you know what credit standing you have. Track your credit score. If you are financially responsible, it is really easy to get your credit score to go up. One of the tricks I use is by keeping my credit utilization low (below 30% is the recommended route). I like to go lower than 30%, this helps increase my savings along with credit score.
Now its time for the ‘L’ word. Loans. Loans can range from many things. To name a few, there are car loans, home loans, and school loans. This one is really hard to avoid because of the economic climate we are in. The price of most things along with inflation have gone up. With this, I apply the same rule to the credit card rule. Anything with high interest, make it a goal to pay it off quick.
You have your spendings and debts in order. This is going to be a fun goal. Just pat yourself on the back. Getting these written down or organized is a tall order.
This is where the fun starts. Since you know by now that you have what all your spending (credit card) and loans are. Now it is important to determine your current net worth. Your previous goals will help you add that together.
Check out one of my old posts on Needs vs Wants . I almost went broke trying to buy an old classic Mustang. My point is, identify a need vs want when it comes to purchases. You have every right to treat yourself – but identify both of these sides first.
Time to set financial goals. Yes this is the movie Inception. After reading 11 goals, there are goals within a goal. On a serious note, set financial goals that can make this experience fun. Set a financial goal (for example) for a vacation, dinner night with friends, personal hobbies, paying off debt, saving up for an education, or buying every book from the Twilight series (remember when that was popular back then?)
Now that you have the list of your financial goals, put an order of what is most important to you. Make them priorities.
After making these financial goals a priority, you budget for these. Develop an envelope system with your monthly income. Make every dollar work. With this, if you have extra money in an “envelope”, feel free to move that around to another specific goal.
Since we are halfway, lets talk about savings. Since you have made your financial goals a priority, its easier to see where your money is going. Work to get an emergency savings of at least 6 months.
You are a financial guru if you have made it this far. Congrats. With this, see if you can develop a plan to save for retirement. This can be from a personal retirement account to a 401k. The recommended goal is at-least fifteen percent of your income, if thats too much- go five percent. The point is to start, even if its a small amount of money!
Once a week I see and make my budget. This is how I know I will never get lost in making my finances. This is how I practice financial literacy every month. Make a plan, stick to it.
Monthly subscriptions are the norm these days with just about everything. These days, we now have car subscriptions (I am looking at you Volvo). Identify the common regular expenses you have (this can be applied to anything, such as rent).
Remember when I mentioned it was good to have emergency savings back in goal 15? Well once in a while you will get hit with random expenses. This can be your car breaking down for example. Prepare yourself for these random expenses.
I am hoping by now you officially have a list of all your spendings. See if you can cut some of these. If not, making a list of it is good enough.
I love food. Food is one of my biggest spendings because I love to go out on restaurants. Cutting back on these and seeing if you can spend less on this can help a lot.
Make a long term plan of where you want to be in life. For example, my long term goal is to have a million dollar in assets by the time I retire. It seems crazy, but strive for a long term goal.
If I want to make goal 22 happen, I know that I need to steadily increase my savings. The way I have been doing this on my end is by giving a bit more to my retirement accounts each year. The goal here is to steadily increase your savings.
Unrelated, but 24 is my favorite number. Anyhow, research. Research every kind of financial decision out there. This goes from purchasing a product on amazon (while checking the reviews) to stocks and mutual funds if you want to go technical. This has saved me too many times. It’s like asking a friend for advice.
Since we are on the topic of friends. Make fully thought out decisions when it comes to borrowing money. This can get ugly if things go South. On my end, I never put myself in this position to begin with (to avoid this kind of potential scenario). Remember, you are your own financial leader (Goal 4).
If you do not trust yourself with money, ask for help. This can range from a trustworthy family member to a certified financial planner.
Banks. This is important because these are the institution that will make your life either easy or difficult. Choose the banks that want to help you out with a high yield savings rate (for example). Everyone’s bank needs are different. This is one of my favorite posts on Reddit regarding to choosing banks.
Read a finance book! Any book! I have learned so much from reading random finance books, it has helped me stay financially literate.
A financial goal can be long and grueling. Just remember the reason why you created the goal and to stay motivated and positive.
Spread the wealth! Spread it by telling your friends your financial goals on how to save money or by sharing this link!