Financial Literacy Month
April 4, 2022
April is Financial Literacy Month, which can be a stressful topic for many individuals. In fact, roughly 64% of Americans say money is a significant source of stress. It is our goal to make budgeting and financial literacy as digestible as possible, so the financial health of our communities continually improve. One way we do this is by breaking financial decisions down into smaller parts so each subject is able to be grasped individually.
A good starting point is to sit down by yourself or with your partner and identify your financial stressors. What are you spending money on that causes you stress? Are there ways you can reduce expenses in that area or manage your money more efficiently? If so, develop a plan and stick to it. This may cause more stress initially, but as you adjust, it should cause less stress over the long term.
As you begin to identify your financial stressors, pay close attention to whether the social circumstances you find yourself in contribute to or reduce your financial stress. For example, if you spend a decent amount of free time in settings that lead to unnecessary or unplanned spending, it may be worthwhile to decrease the amount of time you spend in those settings. For some, those locations might be malls or shopping centers, and for others, it could be in front of the computer or phone at home, where time is spent browsing websites or apps that lead to unplanned purchases.
The Consumer Financial Protection Bureau (CFPB) offers a resource with ten questions to help individuals determine their financial wellbeing. After submitting your answers, you will be able to see how your score compares with other U.S. adults and see steps on how to improve your financial wellbeing.
Another part of the equation is saving. Ramsey Solutions is a great resource to check out if you are looking for both practical and creative ways to save money. A few money-saving methods they propose include buying generic brands, saving money automatically each paycheck or each month, unsubscribing from emails – which is a great solution for those who are prone to impulsively buying items online, and utilizing the resources available at your local library, among several other ideas.
Contributing to a retirement plan is another important way to save. The Social Security Administration finds that one in four adults have not saved for retirement. Social Security is one part of retirement income, but it will not provide all the income you will need when that time comes. If your employer offers a 401(k) match, you should at least contribute the full percentage they are willing to match. However, most financial advisors recommend saving 10% to 15% of your income for retirement.
Budgeting goes hand in hand with saving. The core objective of a budget is to figure out what you earn and what you spend, and to think about ways to spend less so you can save more and/or pay off debt. The U.S. Department of Education recommends the following steps when creating a budget:
- Determine your timeframe and set goals
- Find a budget tool that works for you
- Identify your income and expenses
- Subtract your expenses from your income
- Make adjustments as needed
These steps should be followed consistently, not just once or periodically. Otherwise, old habits may begin to take form again, or new habits may develop without notice. Navigate to MVB's financial literacy page to learn more about the resources the Bank offers.