What does “financial literacy” mean to you?
In its simplest form, financial literacy is the understanding of financial topics relating to personal finance, protection, borrowing, and investing, according to the Federal Financial Literacy and Education Commission.
Here are some key principles of financial literacy determined by the Federal Financial Literacy and Education Commission that you should be aware of this Financial Literacy Month:
- Earnings. It’s essential to have a detailed understanding of your entire compensation package. This includes your pay, as well as an annual bonus, health insurance, vacation days, and any other benefits that may factor into compensation.
- Spending wisely and budgeting. A sound understanding of how to budget is the foundation for achieving your financial goals. Funding retirement, college tuition, even a vacation all require diligent saving over time. Your budget can tell you what you’ve earned, what you’re spending, and what’s leftover each month! There are several budgeting strategies to try – see which one works for you!
- Saving and investing. This includes creating an emergency fund and setting aside money for both short- and long-term goals. Protecting yourself. Knowing what insurance to have to protect yourself and your financial situation.
- Borrowing money and credit. Managing debt is an important aspect of a financial picture. Understanding the different types of debt, how to control your credit score, and keeping yourself from overwhelming debt are essential.
Having a thorough knowledge of these concepts provides a base to make sound financial decisions that lead to a secure financial future.
About Financial Literacy Month
Financial Literacy Month is an initiative aimed at promoting awareness and education about financial matters, including budgeting, saving, investing, and managing debt. It’s a great opportunity to enhance your financial knowledge and skills.
Financial Literacy Month originated in the United States in 2004 when the U.S. Senate passed a resolution to promote financial literacy and education. It was initially observed in April, and since then, it has become an annual event dedicated to raising awareness about the importance of financial literacy and providing resources to improve financial knowledge and skills. Over the years, various organizations and government agencies have participated in activities and initiatives to support this cause.
By: Federal Financial Literacy and Education Commission
