Financial Literacy - Making the right choices managing your money
Financial Literacy is knowing how to make the right choices in managing your money. It might seem overwhelming at first, but planning and goal setting are key to becoming financially literate. There are four main skills that are part of this process: budgeting, savings, debt management and investing.
A budget is a listing of all income and expenses for a given period of time. A budget is a good way to see immediate red flags when comparing income to expenses. Perhaps your income exceeds your expenses and you can save or invest more than you currently are. On the other hand, your budget can also show that your expenses outweigh your income. If the latter is the case you might need to make adjustments to where you are spending. Either way, setting up a budget is a great way to snapshot your finances at any given moment. Budgeting is also helpful for tracking the progress of financial goals.
In case of an emergency, it is recommended that you have enough in savings to cover three to six months’ worth of expenses. Expenses include both fixed and variable. Fixed expenses are the same each month and include items such as a mortgage or rent payment, insurance premiums, and car payments. Variable expenses can fluctuate each month and include items such as fuel, food and car maintenance. Once you have the amount of your savings goal, set up a savings account at M C Bank and have funds directly deposited each month or paycheck into this account until your goal is met.
Many Americans live pay check to pay check with some sort of debt. Having a plan to reduce or eliminate debt is another step-in debt management. There are several different plans to choose from when deciding a debt management plan to follow. Some plans having you paying off the highest interest debt first, while others have you paying off the lowest balance first. Regardless of the plan you decide to go with, remember that once one debt is paid off you should roll that payment to pay off the next debt you may have. M C Bank Online Bill Pay makes debt management easier as your vendors/bills are all in one place, and you can easily set up reoccurring payments to help pay off debt.
Investing for the future is also part of being financially literate. There are so many avenues in investing. Individual Retirement Accounts (IRAs), 401K, Annuities, Real Estate…. the list is long. You must decide what risk you are willing to take in regards to investing and what investments work with your lifestyle and goals.
Working toward Financial Literacy is a life long journey. Having a plan in place can help you to achieve your financial goals. M C Bank is here to help whether it be helping to set up a savings account, online bill pay or starting an IRA. There is no time like the present to set up.