Understanding financial terms is not just a requirement for business professionals. It has an important practical use for regular individuals.
The tough economic climate has made loans and debts regular terms for consumers, and it is advantageous to understand what they mean and their implications so that you can make an informed decision before you apply for one.
This is Financial Literacy 101!
It is important, to be honest about your financial position (see below…) and the way that you manage your resources so that an advisor can give you the appropriate advice about your situation.
Being financially literate is important because it gives you a good perspective on the options that you have. Reading through a debt agreement or a loan application is easier if you are familiar with the terms that are stated in the documents.
A simple but effective way to nurture financial interest and responsibility in your children is to open up a savings account for them.
You may also let them gain financial experience with an IDA account. This will make them appreciate the value of saving money and help them understand the important role that banks play in daily life.
Most transactions involving the movement of money are done through the use of an individual’s bank account, such as the crediting of monthly salaries, deduction of debts, a deposit of an approved loan, and the payment of bills and loans.
Being knowledgeable about your finances will also help you get out of debt. There are online applications that can guide you in making sound decisions on how to manage personal loans.
It is important to understand the monetary system to know possible investments that you can get into and help you cope with credit card debts and mortgages. So never settle for a “default future” and know what’s going on.
Most of the things we learn in college about money refine our concept of how to handle it and make it grow. The common way is to save it in a bank account and let it earn interest.
Other methods involve enrolling in a time deposit account that earns higher interest or investing in stocks, which are best handled by getting the services of a reputable financial advisor. Please don’t invest in things you don’t understand; that’ll only lead to a financial disaster.
Now about my own situation…What I Learned About Growing My Saving
Emergency Fund Savings
I get a big fat juicy F for this. The simple fact is the Emergency Fund account should have had a balance of $877.26. As it stands, there is a balance of $1.00. This is not only hugely disappointing, but it is also, in fact, very worrying.
If we do not find a way of making up $877, then we will not make our goal of saving $10,000 by the end of the year.
Retirement Fund Savings
A+ As of today, I have $1,098 in my employer-matched simple IRA. This puts me on track to save $13,000 by the end of the year. I guess they’re investing in the stock market. They probably know what they’re doing, I guess…
Spending
C- Despite the challenges of the month, we went over budget by only $182.00. Our worst offenders were 1) Food ($72 over), 2) Fast Food ($53 over), and 3) Gas ($26 over). We are worried more about February because we are expecting house guests. But for now, we are moderately happy with our budget results.
Last week, we ran into one small problem (as you always do). During the last hurricane, we had a bad leak from our window; as a result, a whole portion of the subfloor is rotted out.
We needed to run to Home Depot and buy a new sheet of subfloor to patch this job up. Luckily it wasn’t an expensive surprise. Materials cost me $30, and labor cost me $30.
On Monday our new floor starts to go in. And by Friday, the entire room should be finished. Then he can start on the living room, which the landlord has agreed to pay for.
Goals
Pay off Car Debt
Big fat F. I know I should be able to get over this loan, but you know…We only managed to make minimum payments on the car debt. That means we have a balance of $14,691 remaining.
Pay off Credit Card Debt
Big fat F-. If I could give myself a worse grade, I would. Instead of paying off more debt, we added more debt. Once again, this is the result of Unintended Expenses. We currently have a balance of $3,409.
So it was a pretty dismal month. Let’s hope next month is better. I would love to know how you guys did for the month of January. Let me know in the comments.