GRAND RAPIDS, Mich. (WOTV) – Every day we put credit cards and bank accounts, paychecks and mortgages, stock options and insurance policies into the hands of people who haven’t proven they understand how to use them. These financial instruments are powerful tools—sometimes even weapons in the wrong hands. Understanding how to use them properly demonstrates a high level of financial acumen.
Financial education is rarely taught in schools, although some states now mandate this as part of the curriculum standards. Parents want to educate their children at home, but may lack the confidence, understanding, or don’t know how or when to talk to their children or what lessons may be age appropriate. People who understand how money works are better able to make sound decisions in their own lives.
Try to make financial education work as a lifestyle commitment, a long-term goal achieved via a series of small, manageable goals. Here are some steps you can take to achieve that long-term goal:
- Get into the habit of thinking in terms of money. When you add a cold drink to your tab as you pay for gasoline, think: “I’m spending two dollars to quench my thirst.” When registering early for the conference, think: “I’m saving a hundred dollars by reaching a decision quickly.” Becoming conscious of what you spend and why helps you to become aware of your spending habits and of patterns you may want to change.
- Keep track of what you earn and spend. Use a notebook, spreadsheet, personal finance software or any other form that’s comfortable for you. (Most financial institutions and many sites on the Internet offer this software at no charge.) Write down every penny you get or give from any source, no matter how insignificant.
- Develop a budget. The money log you’ve been keeping will help you decide how much you need to allot to each category.
- Read about financial topics or attend informational seminars in your local community. Don’t skip over the finance section of the newspaper. Pick up magazines devoted to economics and finance.
- Familiarize yourself with your pay stubs and billing statements. Do you know what rate you are being charged for credit cards? Credit card companies may charge one rate for purchases and another, higher rate for cash advances. Customers with better credit ratings usually get more attractive rates.
- Send for copies of your credit report from the three major credit reporting agencies (Equifax, Trans Union, and Experian). You are allowed one free report each year from each agency. Look them over and make sure everything on them is accurate. The U.S. government’s Federal Trade Commission website (www.ftc.gov) has lots of good information about understanding these reports and correcting any errors.
- Ask questions. Are you taking full advantage of your benefits package at your place of employment? If you don’t fully understand your benefits, speak with your human resources manager about them. If you don’t understand your billing statements, call customer service and speak with a representative.
- Educate your kids. Explain to them that money is a finite resource: every dollar spent for one purpose is a dollar not spent—or saved—for something else. Depending on their ages, allow them to make financial transactions. Give them allowances. Sign them up for financial education classes. Resolve to make the whole family savvy about money!
There is no time like the present to improve your financial acumen. Take small, attainable steps and hold yourself accountable for achieving milestones. Guidance from a qualified financial professional can help you think about the best ways to plan for the future and manage your money.