4 Facts About Financial Literacy

I really need to do better with my money!

I cannot begin to tell you how many times I’ve said this. It’s actually pretty funny because everyone who knows me would tell you adamantly that I’m great with money. I never pay a bill late, I never like pulling anything out of my savings account (but that doesn’t mean I won’t) and I try to be “adult-like” with my spending. From society’s perspective, I make decent money (whatever that means) and I do a great job at living within my means. But for whatever reason, I have repeatedly (more like all the time) found myself waiting intently on my next paycheck. Yes, my bills would be paid. But I kept forgetting about the most important one: me. Of course, I still bought myself frivolous things from time to time. In fact, I had no problem at all doing so (even though my family would probably say otherwise).

My problem was that I failed to spend money on things that mattered. I didn’t save like I should’ve been (or at all). I even took the time to create a nice little chart that was designed to help me stay on budget. It detailed where my money would go and outlined very specifically how much I could spend on every little thing. It looked great on paper, it really did. You would’ve thought I was on top of it all. It was an outright facade I tell you. A facade…

While I really did “try” to be wise with my spending, I had a knack for convincing myself to purchase something that I honestly could’ve waited on.

When will this area rug ever be this inexpensive again? But this purse is on clearance!

In my mind, it made sense to buy something (even if did not align with my handy dandy budget chart) if it was on sale for, ahem, a good price. I found myself saying things like, “The money that’s supposed to go into the savings this month can just go towards this new thing. I’ll try to save a little extra next month to make up for it.” Guess how many times I actually “made up for it”? Let me shamefully cover my eyes…

Unfortunately, I wasn’t provided with a strong financial literacy foundation (as is the case for a lot of us). This means that I had little (no!) understanding of how money worked in the real world.  I simply figured that in order to make it, I had to work. The harder I worked, the more I would make. Ugh…the inaccuracy.

I’ve always been naturally good with budgeting (for the most part). Savings, investments, interests rates and financial resources, on the other hand, have always been extremely foreign to me. It wasn’t until recent years that I started hearing people say you should “pay yourself first.” As simple as this concept is to most, to me, it was a huge revelation. I ate it up like a cupcake. Yes! If I can pay all of these bills every month, I should be able to pay myself too! It sounded good but I still somehow I went months without saving a dollar. *Drops head in shame*

Now, if I didn’t have the money to save, that would be a different story…but that’s not the case. I made more than enough to save. It was just that my so-called “effective budgeting” was nowhere near effective.

After looking more into this, I started to see what some of my issues were. So let’s talk about it. Here are 4 facts about financial literacy:

1. You can’t teach (or live accordingly by) what you don’t know. So it’s time to start knowing. Financial literacy research should be your best friend. I’m definitely new to this whole concept but let me tell you, I’m amazed at all that I’ve learned already. The information is out there, we just have to go get it. After we take the time to do this, we’ll be able to live like financially literate people live and teach like they teach. Can you imagine the impact this will have on our babies?
2. You can no longer blame your lack of understanding on your upbringing. Okay, you weren’t provided with an understanding of financial literacy. Is that unfortunate? Of course, but it is what it is at this point. It’s time to do your due diligence and educate yourself so that you don’t continue making the same mistakes. At some point you have to take responsibility for the things you don’t know. Isn’t adulthood grand?
3. Stop depending on the system to take care of what’s yours. Do you think the banking industry has your best interest in mind? What about your employer? Are they working for you or for themselves? I think we all know the answer to these questions. But for some reason, we still trust them to make decisions for us. We agree to some of the most ridiculous things solely because we don’t know any better. I, for example, had my money sitting in a savings account for years without having the slightest idea what the interest rate was on the account, why I chose that account, and if that was the right type of account for me and my family. I also had a 401k that I had absolutely no understanding of. I signed up because that was what I supposed to do.  I trusted them to make all of the decisions as it pertained to my money. This just doesn’t make sense. Being unaware is never the way to go.
4. Remember that though talking about money can be uncomfortable, it’s more than necessary. I don’t know why talking about money is so taboo. I’m not suggesting that we should all shout our annual salary or debt balance to the world, but we should be able to conversations about it. Part of the reason we’re so oblivious to all things financial is because we don’t ask questions and share information. Money management is a skill that only gets better with practice. That practice can begin with  a simple conversation that may just change your entire perspective.

Clearly, I am a money management novice in every sense…but not for long. I cannot begin to describe how excited I am to share my financial literacy journey with you. Let’s get a handle on this together. Are you ready?  😉

 

Does talking about money make you uncomfortable? What’s your definition of financial literacy? Do you fit the bill? What tips (no matter how big or how small) can you share with little old me? Help me out… =)