This Financial Literacy Month, we’re challenging you to take account of your financial knowledge – and to pass this information on to others who may benefit from it. Maybe you have strong knowledge in certain financial areas but not in others. Improvising your financial literacy can ultimately provide you with a better life.
So, here are 5 questions to ask yourself which can help you on your path to a brighter financial future.
Are you paying down high-interest debt?
Debt carrying high interest rates, like credit cards, can be the most debilitating. The longer you wait to pay off this debt, the more quickly the balance grows, putting you in an even bigger financial hole. This can spiral downward and negatively affect your credit score and wellbeing. So, the sooner you can pay off high-interest debt, the better.
Do you understand your investing options?
Investing is such a huge word that gets thrown around by individuals and financial pundits alike. We all would like to be better investors, and the first step in doing so is understanding your investment options.
There are many different types of assets in which you can choose to invest, including:
- Stocks
- Bonds
- ETFs
- Mutual Funds
- Money Markets
- Real estate
But before you invest in any of these, or other assets, you should understand the risks of doing so, along with knowing when to buy and sell each asset. Some investments are more complicated than others, so it can help to work with a financial professional if you have any questions.
Do you understand estate planning?
Whether you’re at the beginning of your career or closing in on retirement, an estate plan can be an important way to leave a legacy for future generations. An estate plan helps to determine what will happen with your assets after your death.
When managing your estate plan, there are many things to consider, such as naming beneficiaries, whether to create a trust, charitable giving, managing estate taxes, and more. Understanding each of these aspects of estate planning can help you create a lasting legacy for your beneficiaries.
Are you using tax-saving strategies?
You work hard for your money, and you want to keep more of what you’ve earned. Tax-saving strategies allow you to work within the financial system to reduce your tax burden and keep more money for retirement, paying down debt, or spending at your leisure. There are many well-known tax-saving strategies, like saving in an IRA, 401(k) or other tax-advantaged retirement account. Then, there are lesser known strategies, like knowing what tax credits and write-offs you can use each year to lessen your tax burden.
Do you recognize the importance of financial literacy?
Learning more about your financial options is helpful in more ways than one. Of course, there are the direct effects of helping you pay down debt, save more for the future, and invest wisely, but there are also other positive benefits associated with financial literacy.
Those that are financially literate tend to have less stress in their marriages, have less anxiety in their day-to-day lives, and have more flexibility to spend with friends and family. So, if you want a better life, you might want to start with improving your financial literacy.