April was officially declared as Financial Literacy Month in 2004, when the senate decided that it was important to bring awareness and education to the public about finances. The goal of Financial Literacy Month is to promote and advocate for financial education, especially for children and teenagers. This month gives you the opportunity to sit down and make a game plan to improve your financial situation overtime. Talk to your advisor about how to properly budget, your financial goals within the next few years, and try to include some back up plans just in case. Here are five things you can do to get a better grasp on your finances this month.
1. Set a Budget.
One of the most important things to start out on the right foot is to create a realistic budget for yourself. Include the obvious expenses, and then try to compile a list of other smaller things that you may not think about day to day. For example, subscriptions, coffee runs, takeout, etc. Separate the things that you prioritize and reevaluate the areas that may be considered “frivolous”.
2. Get to know your Debt-to-Income Ratio.
Your debt-to-income ratio is a calculation of your debts divided by your total take-home pay. This calculation includes your rent and/or any outstanding loans. This will basically give you an idea if you are living within your means.
3. Assess your Credit.
Credit is one of the most important aspects of your financial future. Your credit score is a representation of how well you manage your debt. There are many resources to check your credit score and find out ways to boost it. Happy researching!
4. Start an Emergency Fund.
We have spoken about this in one of our previous blog posts (which you can read here), but we think this is an important thing for anyone to start. Let’s hope there is never a time you need it but stashing away some money for an unforeseen circumstance can put you in a better position for the future. A good rule of thumb is that you should have six months’ worth of savings in your emergency fund. You can even start on this by automatically setting up a little bit of your paycheck to go into this separate account.
5. Always have retirement in the back of your mind.
The goal of this month is to work on your knowledge of money management. One of your biggest financial goals should be to be set up for retirement- whenever that may be. It is never too early to begin saving money so you can retire with no worries for you or your family. Without knowledge of these important financial skills we have discussed, you may have a harder time when retirement age comes along for you.
Life happens, and sometimes finances fall short. These are small steps you can take to make sure you are prepared for life’s highs and lows. During the month of April, work with your advisor to assess your finances if you feel necessary. They are here to help! We also encourage you to share this article with anyone that is just starting their financial journey.