Well since there’s not much else happening on August 14th each year (sorry if that’s your birthday, and if that’s the case, Happy Birthday!), the day-naming committee (DNC?) decided today is National Financial Awareness Day. So, I guess we need to all be more aware of our finances today?
To kick off our awareness, maybe it’s a good idea to talk about what being financial aware actually means. A quick google search shows that the term can be often interchanged with financial literacy, which Investopedia defines as “Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.”
So basically, it looks like if you are financially aware, you have your financial ducks in a row and have the basics of money covered in your world. But if you don’t feel like you have a good grasp on these topics or want to make sure you do, here’s a basic plan that might help you get on the right track.
Start Simple
First, you’ll want to start with the basic building blocks of personal finance. There are tons of YouTube videos and websites that will coach you through the foundations of budgeting, compound interest, savings, and debt management. Numerous online resources, books, and financial literacy courses are available to help you grasp these essentials.
Set Goals
Define your short-term and long-term financial goals. Whether it’s buying a home, paying off debt, saving for education, or planning for retirement, having specific goals helps you create a roadmap for your financial journey. Each goal might require a different strategy, so it’s important to be clear about what you want to achieve.
Educate Yourself and Continue to Learn
Commit to ongoing learning about personal finance. Read books, articles, and blogs written by reputable financial experts. Attend webinars, workshops, and seminars that cover topics like investing, tax planning, and estate planning. The more you know, the better equipped you’ll be to make sound financial decisions. In today’s digital age, there are tons of “experts” on the social media platforms that have no background or training and are just looking for clicks and followers to get paid! Not every financial strategy is going to apply to your situation.
Understand the Basics of Investing
Diving into the world of investments can seem daunting, but it’s a crucial aspect of financial awareness. Learn about different types of investments, such as stocks, bonds, mutual funds, and real estate. Understand the risks and potential rewards associated with each investment option. Remember, knowledge is your best defense against investment pitfalls.
Create a Budget
I know that word might scare you or put you to sleep immediately, But according to a Nerdwallet survey, more people are living on a budget than in the past (but not always sticking to it the article mentions). A well-structured budget is a cornerstone of financial awareness. Track your income and expenses to understand where your money is going. This practice allows you to identify areas where you can cut unnecessary spending and allocate more towards savings and investments. There are also a few apps out there to help you like Mint, YNAB and Rocket Money.
Manage your Debt
Educate yourself about different types of debt, such as credit cards, student loans, and mortgages. Strive to manage and reduce high-interest debt as quickly as possible. Avoid accumulating more debt than you can comfortably repay.
Stay Informed about Taxation
Keep a close eye on your taxes as they can play a significant role in your financial well-being. Learn about tax deductions, credits, and strategies to minimize your tax liability. Tax-efficient investing can also make a significant difference in your long-term returns. Working with a professional instead of doing your taxes on your own if your situation gets complicated can pay for itself and possibly keep you from getting into IRS trouble down the road.
Build up your Emergency Fund
Life is unpredictable, and having an emergency fund provides a safety net during challenging times. Aim to save three to six months of living expenses in an easily accessible account. And don’t worry too much about what you’re earning on that money. The key is access. Your bank should have options to earn a little better than 0% but still give you access to your savings if you need it.
Plan for Retirement
No matter your age, it’s essential to plan for retirement. Understand different retirement account options like 401(k)s, IRAs, and pensions. Determine how much you need to save each month to achieve your retirement goals. There are lots of calculators out there that can help, but if you have more complex retirement situations and goals, it might be a good idea to get help (see below).
Call for Backup
While self-education is valuable, there’s no substitute for professional financial advice. Consider working with a certified financial planner (CFP) who can tailor a comprehensive financial plan to your unique situation and goals. Even if you’ve got it all figured out, your retirement is important enough to get a second opinion to make sure you’re up to speed on any potential tax savings strategies that might help make retirement easier.
Increasing your financial awareness is a journey that requires dedication, curiosity, and a commitment to lifelong learning. By understanding the basics of personal finance, setting clear goals, and continuously educating yourself about investments, debt management, taxes, and other financial aspects, you can gain the confidence and knowledge needed to navigate the complexities of the financial world.
So happy Financial Awareness Day. Doesn’t that feel better checking that box? And if you’re not quite there and need help figuring out how to achieve those financial goals, feel free to reach out using the button at the top right of this page or emailing me at Brian@TheAeroAdvisor.com
Can't find what you're looking for on our website? Have a question regarding your financial picture? Want to leave us some feedback? We would love to hear from you. You can email me at Brian@TheAeroAdvisor.com or fill out the form below.
By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
LPL Tracking #467182
