Having financial literacy means being able to discern the major financial issues that most people encounter at one point or another, including debts, investments, emergencies and beyond. Sounds straightforward, right? But statistics regarding the average American’s relationship to money reveal otherwise:
- Roughly four out of every five U.S. workers live paycheck to paycheck.
- More than a quarter aren’t making monthly savings contributions.
- Nearly 75 percent are in debt of some sort.
In order to ensure that you don’t fit into those statistics, you need to learn how to be financially literate, and it starts with developing a solid understanding of the following concepts:
Debt
Today, millions of Americans are overwhelmed with mortgages, car loans, credit card debt and student loans. So much so that last year, Northwestern Mutual reported that 40 percent of Americans spend up to half of their monthly income on debt payments. Debt costs serious time and money to pay off, and can hinder your ability to invest in your future.
Budgeting
What’s the first step in paying off any debt you have and making smart decisions for the future? Creating a budget and sticking to it. Sit down, do the calculations on what you can afford versus what you’re spending, and start saving for your goals today so that you can have a better tomorrow.
Emergencies
According to a report from Bankrate, less than 40 percent of Americans say they could cover a $1,000 unplanned expense. To be financially wise, you should have funds set aside for any sudden emergency, like a totaled vehicle or loss of employment.
The closer you are to retirement, the more important it becomes to have financial literacy – especially because many important and often irreversible choices may come your way. At American Financial Investments, LLC, we can help you become more confident in your knowledge of the financial landscape – from Social Security filing strategies to investments and insurance options, we’ve got you covered.
Working with a financial services professional allows you to create a financial plan that will work for your unique situation, and can provide you with the understanding you need to feel confident and closer to your dreams. QCBN
By Ronald Stevenson and Barbara Clark Stevenson
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