Let’s be honest: spending time improving your financial literacy sounds boring, but having the know-how and tools to manage your money means having a more independent financial future — one where you can afford to live life on your terms. That makes improving your financial literacy with these five simple steps worth it, right?
1. Create & follow a budget.
Your first step is to establish a baseline for your finances: What you earn, how much you spend, how you spend it, etc. Anyone with a smartphone can use a personal finance app for help. Start by tracking your spending for a month to see what you spend and where. Then continue month by month to get a better picture of your spending habits.
Get started with this list of free or low-cost personal budget apps.
2. Invest in the right insurance.
Without insurance, your family could be one car wreck or unfortunate accident away from an ocean of financial trouble.
Driving without car insurance, could lead to having your license and/or vehicle registration suspended, receiving a hefty fine, and being sued. Car insurance helps protect you from the cost of an accident and stay legal on the road. It can also work alongside your health insurance to pay for accident-related injuries.
Life insurance can also help prevent a serious financial fallout. If the unthinkable were to happen to you, a life insurance policy could save your family from drowning in bills and financial stress. It could help pay for unexpected medical bills, school bills, funeral costs, and loss of income. No matter your age, life insurance can help support your family and loved ones.
3. Save for emergencies.
Only 39 percent of Americans have enough savings to cover an emergency costing $1,000. If you’re among those who don’t have enough savings, consider trying “the envelope method.” The envelope method is where you keep the cash to pay for different household expenses in separate envelopes. This could help you more carefully track spending, avoid debt, and save for emergencies.
Start saving for emergencies with the envelope method. You might already have all the supplies you need!
4. Begin saving for retirement.
Retirement seems like an eternity from now, doesn’t it? Putting off any planning can cost you, though. Here’s how: compounding interest. Compounding interest is the interest you earn on the principal you’ve set down, as well as the interest that principal earns. It’s a little like snowball effect for your savings. The sooner you start rolling that snowball, the bigger it will be at the bottom of the hill! In short, compounding interest rewards you for saving money over the long haul.
Give this compounding interest calculator a try to see how compounding interest can help you save for retirement, even when you’re decades away from it.
5. Never stop learning.
Are you ready to take your money skills to the next level? Or do you still struggle to manage your day-to-day finances, no matter how hard you try? Whichever category you fall into, there are free online and in-person resources that can help you with everything from making a budget to investing in the stock market. With the right information, there’s no limit to how well you can set yourself up financially. You’re in control!
Improve your money skills with these free online and in-person resources.
It’s never too late to start learning about finances to improve your financial literacy. What do you think about starting today?
These five simple steps could keep you from going down a path of financial worry. Remember: financial literacy doesn’t have to be complicated. It can be as simple as taking the time to understand how money works in order to make the best, most informed decisions for your family. At Direct Auto Insurance, we can help protect your financial well-being with the right insurance coverages and services. Call 1-877-463-4732 to speak with a friendly agent who understands the ins-and-outs of car and life insurance. They can even connect you with health insurance pros, too!
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