Beyond financial education: what you need to earn with your money

April is Financial Literacy Month, designed to promote greater financial understanding among children and adults. Yet more than half of Americans get anxious just thinking about their finances.

Why are so many adults stressed about money? In part it is because managing money is complex. Understanding the basics of budgeting, saving, and even compounding interest rates is a good start. But financial education is not enough: you also need financial capacity, financial well-being and financial resilience. Here’s how to get them.

Make financial education a family value

Managing money used to be relatively simple. Before 2000, many companies offered employee pensions and there were fewer financial apps and options. As employers switched to 401(k) plans, the burden of financial planning shifted to the employee. Combined with the onslaught of credit and debit cards, financial apps, loan options, and mounting consumer debt, it’s no surprise that most adults feel anxious about money management.

As the economic environment has changed, Americans must challenge long-held assumptions about personal finances. For starters, make financial education an integral part of your family values. Talk to your partner and children about money principles and best practices. You can have your children manage household expenses during the day or encourage a family member to consider an investment idea and explain the reasoning behind their decision.

Create a financial wellness checklist

Financial wellness is the ability to live comfortably today and still have the means to support yourself. Just like physical health, financial wellness requires regular maintenance and check-ups to make sure you’re on the right track. Here are questions to ask yourself:

  • Am I saving enough money for emergencies?
  • Am I spending more than I earn?
  • What is my credit score? How can I improve it?
  • How much are my retirement savings worth today?
  • Do I have disability protection if I can’t work?
  • Is my life insurance coverage enough to support my family?
  • Do I have a will and is it up to date?

A financial plan is not something you “set and forget.” It’s always a good idea to take a financial wellness checkup when you have a change that could affect your finances, such as getting married, having children, changing jobs, or receiving an inheritance. But you don’t need a major event to make sure you’re in good financial shape — reviewing your checklist annually can keep you up-to-date and up-to-date with the current economic environment.

Encourage and guide each other

Financial education is a skill that can help us make better decisions about money. But the tools for wellness and financial growth aren’t equally available to everyone, making it hard for friends, family, or loved ones to prosper financially.

The gap between what we’re taught and what we need to do to achieve financial wellness is even more apparent when you consider that most people “don’t even know” that they don’t know how to manage their finances.

Families, friends, and communities should encourage and guide each other to improve financial literacy and well-being. Groups can:

  • Share information and financial experiences.
  • Help others better understand how to navigate the economy.
  • Allow people with similar goals or interests to get together.
  • Create a safe space to discuss possible solutions for personal financial growth.

Also, don’t rule out hiring a financial professional, it’s not just for the rich. Many low- and middle-income people can also benefit from financial planning. If you choose a CERTIFIED FINANCIAL PLANNER™ (CFP®), they have a fiduciary duty to you. Many operate for a fee only, which means that the decisions they make must be in your best interest and not based on the commission they could earn.

Build financial resilience

Having financial knowledge does not make you immune to the economic system that surrounds us. Many financially savvy people can find their finances negatively affected by things that are out of their control; That’s where financial resilience comes into play.

Financial resilience is the ability to bounce back from unexpected events, such as losing your job or being affected by a significant expense. It means you have enough money in a savings account to handle emergencies and that you have access to the information and support you need when things go wrong. Here are some things you can do to build your financial resilience:

  • Set financial goals. Make sure they are realistic, but place them high enough that they motivate you.
  • Have a budget. Keep track of where your money goes and make sure you don’t overspend in any one area.
  • Create an emergency fund. You want an emergency fund that covers at least six months of living expenses.
  • Pay your debt. If you have any high-interest debt, like credit cards or payday loans, pay it off quickly.
  • Know where your money is going. It’s easy to get caught up in day-to-day expenses. But monitoring where and how you spend can help you stay on track.

Although American adults generally understand financial basics, many still find themselves in precarious financial situations. With 78% of working Americans living paycheck to paycheck, it’s clear that financial literacy is a problem.

Here’s the good news: a little financial planning can go a long way. By taking a few small actions now, you can put yourself on the path to becoming capable and resilient with your finances.

CEO, blue ocean global wealth

Marguerita M. Cheng is Executive Director of Blue Ocean Global Wealth. She is a CFP® Professional, Certified Retirement Planning Counselor℠, Certified Retirement Income Professional, and Certified Divorce Financial Analyst. She helps educate the public, legislators, and the media about the benefits of competent and ethical financial planning.

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