Help Improve Your Financial Literacy

APR 08, 2011

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What does financial literacy mean to you? Knowing how much is in your checking and savings accounts? Remembering what the interest rate is on your credit card? Taking advantage of a free credit score?

The truth is financial literacy is all those things – and much, much more.

Being financially literate means you have the knowledge and comprehension to make informed decisions about finances, whether it’s in terms of investments, savings or simpler things like personal budgets. If you don’t have a plan for managing your financial decisions, it may be time to work on your financial literacy.

April is Financial Literacy Month, the perfect time to brush up on your financial knowledge – or become truly literate for the first time. Consider these tips to improve upon your financial literacy.

  • Check your credit report. With any big undertaking, you need a good place to start: Your credit report is the perfect starting point on your journey to financial literacy. Because you’re entitled to a free credit report each year, it’s also an easy place to start. Once you get the report, you should not only check it to see what shape your credit is in, you should look carefully for any mistakes or discrepancies. Having good credit can help you go far in your financial life, so making sure that your credit report is clean and accurate is essential.
  • Get organized. Is your financial paperwork more piled than filed? The seemingly endless stream of paper that comes with bank accounts, credit card, retirement accounts and other financial products can get overwhelming pretty quickly. Learn what you need to keep, how long to keep it and what you can throw. But before you throw anything out, make sure that any identifying information is destroyed, to prevent fraud.
  • Learn to manage credit and debt. If, when you reviewed your credit report, you were shocked by the amount of debt you saw, it’s time for a credit reality check. Start by making a commitment to only use money that you have, and begin a plan to start paying down your debts. Set up automated payments whenever possible, so that you always pay on time. Paying late can have a long-lasting negative impact on your credit report.
  • Be smart about borrowing. Whether you want to buy a house, a car or some other big-ticket item that requires borrowing, it’s essential to know what you’re getting into when you borrow money. Know the difference between adjustable and fixed rate mortgages when buying a home; learn about interest rates and any associated late fees.Cultivating an interest in financial news can only help you achieve financial literacy. Watch or listen to the business or market reports you might have otherwise clicked past on TV or the radio – you might just find out something that will help you and your finances.