Do you consider yourself financially literate? Shockingly, two-thirds of Americans weren’t able to pass a financial literacy test. Even worse, a recent survey found that many Americans could not cover a $1,000 surprise expense without going into debt.
At Own Up, it’s our mission to help people become as financially savvy as possible. This goes hand in hand with financial health. If you don’t understand your finances, you can’t control them. Whether it’s knowing how your mortgage rate affects your monthly payment or deciding what to contribute to your company’s 401(k) plan, being financially savvy can help you build a comfortable nest egg and reduce stress.
April is Financial Literacy Month, so we thought it’d be fun to compile some of our favorite tips on financial health from top experts and bloggers. Have a great tip of your own? We want to hear it! Through April 30, submit your best finance tip here for the chance to win a $100 Amazon gift card.
1. Take a snapshot of your finances: Open and review all of your financial statements so you know the “before” picture of your finances and can set your priorities about what to do next. Learn more from Suze Orman, a personal finance expert and best-selling author, focused on helping people become financially healthy.
2. Pay off your credit card balances in full each month: The best way to build your credit score so you can get loans for homes, cars and other large purchases is to prove your credit worthiness. Use your credit card, but only buy what you can afford and pay off your balance every month.
3. Automate your savings and investments: If you can’t see it, you can’t spend it. One of the best ways to save is by setting up a recurring transfer either directly from your paycheck or from your checking account to your savings account. The Budgets are Sexy blog suggests this tip among other financial habits with a high rate of return.
4. Keep your credit safe: You know your credit score is an important part of your financial health. In fact, having a high one can save a lot of money by helping you qualify for the lowest rates. Bottom line: Know your credit score and review your credit report regularly for any fraudulent charges. Stefanie O’Connell lives by this advice and travels the world sharing it with other women.
5. Create a budget you can stick to: Do you know where your money is going every month? If not, you need to do a financial audit. Understand where you are spending and determine how much of your income is needed for necessities, how much you can spend on entertainment and what amount to save. Then develop a budget that you can stick to, putting at least some of any salary increases into additional savings. Want inspiration? Read the Making Sense of Cents blog to see how the author paid off debts and earned her financial freedom.
6. Be strategic with your savings: Don’t stuff cash under your mattress. And definitely don’t keep it all in a regular checking account. Or a regular savings account for that matter. The average savings account yields about 0.10% annual interest. Take this advice from the Part-Time Money blog and utilize a high-yield-savings account to get about a 2.2% return on your money.
7. If you haven’t start saving for retirement, do it NOW: Kicking up your legs and reading all day or traveling often sounds like a great retirement, but only if you have the savings. And most Americans don’t. The earlier you start, the more you will have. Read more about retirement trends at The Motley Fool.