According to Webster’s Dictionary, financial literacy refers to skills and knowledge that allow individuals to make informed and effective decisions by understanding finances.
Financial literacy starts with a basic understanding of ‘money matters’ to create a sense of economic well-being, self-trust, and financial confidence. Understanding that financial literacy impacts financial confidence includes:
Save- Saving is preparing for the future through actions such as:
- Consistently contributing money into a savings account
- Saving for large purchases
- Increasing your retirement savings each time you get a raise
- Having an emergency fund with six months of living expenses saved
Manage debt- Managing debt includes repaying and avoiding debt through actions such as:
- Seeking out the lowest interest rates when borrowing
- Paying off credit card balances each month
- Making payments on time
- Avoiding bankruptcy by working with a credit counselor when debt becomes overwhelming
Invest- Investing for the future for a financially secure retirement through actions such as:
- Participating in your employer-sponsored retirement plan
- Financial planning
- Working with a financial professional
- Having adequate insurance to protect your ‘nest egg.’
- Investing in after-tax strategies such as annuities and other investments
Financial literacy also includes having a basic understanding of how to pay bills online, manage bank accounts, manage debt, fill out income tax withholding forms at work, and other money-related actions. Without a financial literacy foundation, one may struggle financially throughout their life.
How financial literacy impacts financial confidence isn’t always taught in schools
That leaves financial literacy up to parents to educate their children and individuals to learn independently or to find education through a trusted source. Who can help you if you have questions about financial concepts?
- A capable educator or financial literacy teacher
- A Financial Professional
- A Certified Public Accountant (CPA)
Talk to a professional to understand more on how financial literacy impacts financial confidence
Financial illiteracy affects all ages and all socioeconomic levels. It’s up to all of us to improve financial literacy and help others move toward financial independence and freedom.
SWG 2726910-0323a The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.
When thinking about their financial future, many pre-retirees and retirees experience anxiety and uncertainty. With McKellar and Company’s Financial Planning process, you’re able to focus on today, knowing your future is secured. Contact us today to schedule an appointment.