Celebrating Financial Literacy Month

Apr 1, 2022 3:25:42 PM

It’s that time of the year again, and no I’m not talking about taxes. I’m talking about financial literacy month! Introduced by the National Endowment for Financial Education (NEFE) over two decades ago, financial literacy month is now celebrated across the nation as a time to shore up your financial knowledge and make sure your personal finances are in good shape. Most experts suggest conducting a financial checkup every year, but what does that actually mean? 

Just as you should go to the doctor for a yearly checkup even if you don’t think there’s anything wrong, it’s a great idea to make sure you’re in a great place financially. This will help make sure nothing falls through the cracks if you should encounter any unexpected financial difficulties in the future. Below are five simple tasks you can do as part of your yearly financial checkup.

Make a Budget

Budgeting is at the heart of personal finances. It is important that you have a sense of how much you are earning vs how much you are spending on a recurring basis. If you don’t already have a budget, first keep track of your income, then note down all your regular expenses such as rent and utilities. Next, add in your variable expenses like entertainment, travel, or other one-off expenses. After making your budget, you will be able to get insight into where you could be saving more money or where you might have room to spend more. If you need help getting started, check out the following list of free budgeting tools online.

Manage your Debt

Review the status of paying down your debt, including any student loans, mortgages, or credit card debt. If you see your debt is rising, it might be a good idea to spend more on paying down the debt, especially if you have high-interest credit card debt. Consider switching to a credit card that charges lower interest rates, and make sure to also check overall levels of interest rates to see if refinancing a car loan or mortgage can save you money. 

Check on your Credit

Having a good credit score is key to everything from receiving a loan or getting approval to rent an apartment. There are three main credit reporting agencies, and each one is federally required to provide you with your credit report for free once every year. Head over to AnnualCreditReport.com to see your credit report, and check for any errors or things that look off. If you want to raise your credit score, some strategies include avoiding late payments, not opening too many lines of credit in a short period of time, and paying off your debt.

Insurance Coverage

It is important to check that your insurance coverage is appropriate for your needs. The right coverage may change over time, so make sure to check that the amount of homeowners, health, and life insurance you have suits your risk tolerance. After all, being under-insured could potentially result in large out-of-pocket expenses at a time when you least expect it. A checkup can also be a good time to research if there are other insurance providers you could switch to or bundle policies to save money while getting the same coverage.

Prepare for Retirement

It’s never too early to start preparing for retirement. During your financial checkup, make sure you are contributing at least enough to get an employer match in any 401(k) plan if you have one. Once you’ve maxed out your contributions, you can also consider opening a traditional or Roth IRA if you want to put more of your money towards retirement. As you get closer and closer to the retirement age, make sure your portfolio is balanced according to your goals—generally you should be taking on less risk with your money the closer you are to retirement. 

If you take the time to do your financial checkup, you will be well on your way to a financially secure future. You may find aspects of your financial situation you want to change, or you may find that you are doing just fine. Either way, it’s great to get a sense of where your finances are. After all, there’s no better way to celebrate financial literacy month than having all your personal finances in shape!

Tags: Savings, Money Tips, Debt Management, Budgeting, Retirement