At the core of my work (Financial Literacy manual) is the notion that early, effective communication regarding finance, and the adoption and practice of healthy financial techniques, is an essential tool in the intellectual development of children. In the end, it will be these early conversations that will assist children in becoming financially sound adults. Unfortunately, however, there are a multitude of events that result in such conversations taking a back seat. These events include, but are not limited to: a lack of access to resources (classes, books, the Internet, pamphlets, and more), specifically within Black, brown, and impoverished communities; parents/guardians (themselves) lacking pertinent financial information to disseminate; and many families choosing to spend time tackling urgent matters rather than engaging in open discussions surrounding finance. As a result, many have journeyed (and will continue to journey) through life ill-equipped to properly manage money (budgeting, diversifying, investing, and most importantly saving). But, as of late, there have been major pushes to prevent financial illiteracy in adulthood, such as incorporating Financial Literacy classes into high school curriculums.
Financial Literacy is, in most high schools throughout the United States, a required course taken during one's senior year. The course is seen as an answer to relentless debates from educators and policymakers regarding the dangers of prolonged financial readiness. Therefore, if a child has not built a formidable relationship with money prior, financial literacy courses will (hopefully) provide students with the opportunity to learn about personal financial planning, how economics, politics, and social tenets impact both domestic and global economies. Additionally, such courses assist students in building a financial lexicon. Although intervention at the secondary (high school) level has yielded positive results, research conducted regarding adults, finance, and saving as a whole, produced statistics that are frightful. According to the National Financial Educators Council (NFEC), adults age 35 to 54 admitted that they had once turned down a job or promotion as a result of their credit or financial background. Of the 1,165 participants surveyed, 5.2% stated that they had been turned down for a job due to their financial background. Likewise, according to the NFEC, adults age 35 to 54 (1,100 surveyed, 26.3% tallied) stated that their current or potential employer had checked their credit history as a condition of their hiring or promotion. Thus, it can be concluded from the findings that a unstable financial history has hindered the professional lives of over 2,000 individuals. Sadly, a majority of Americans not surveyed have financial lives that mirror these findings. Furthermore, when the NFEC conducted additional research, specifically related to adults and their saving habits, they discovered that nearly half of all workers saved less than $50,000 for retirement, and 15% had not begun saving for retirement. While there are 65% of workers who have started to save, the reality is that many senior citizens will struggle financially to stay afloat. In examining what current millennials are contributing financially to their future, a Wells Fargo study concluded that 54% of millennials fear falling into crippling debt and 39% of millennials worry about their financial future at least once a week. As a millennial, I can truthfully disclose that I, too, worry about my financial future; however, with my vast knowledge and financial know-how, I am doggedly working to avoid falling into a financial pit of despair. Likewise, I am doggedly working to bolster your confidence, know-how, and preparedness as well. It is my hope that the above facts and statistics helped shed a light on the severe effects of financial illiteracy.
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With much attention being paid to examining what financial markets are, examining how these markets positively and negatively influence our lives, defining money, and comprehending its three functions, it is time to apply the theories learned to practice. Thus, learning how to develop healthy fiscal habits is the pressing goal. In being clear about what you hope to achieve, specifically with regard to personal financial planning, we have to be honest about the consequences sure to be faced should you fail to adopt healthy habits. Nevertheless, as you continue on your journey towards financial independence, it is my fervent wish that you be equipped with the tools to avoid the pitfalls of future financial ruin.
The first step in your journey should be working to define what personal financial planning is, and how you can incorporate this definition into your daily practices. To start, success involves creating solid financial plans and executing goals. To further understand how proper financial planning can affect one’s overall well-being (personal, professional, and financial to name a few), let us explore some tenets of PFP, which include, but is not limited to, manually or electronically creating a budget. Through the utilization of Microsoft Office, Excel to be exact, spreadsheets that clearly outline deposits, withdrawals, and miscellaneous expenses can be created, monitored, and amended. To decrease the amount of time needed to save documents to the desktop, and fail-proof your work from hard drive crashes, Google Drive offers spreadsheets that automatically saves changes as you type. The second step in your journey should soon be centered around reducing the rate of borrowing -- ultimately consolidating debt and finally eradicating debt from your financial life. Again, equipping yourself with a great plan that realistically details the step-by-step processes, and includes drafts of Plans B - Z (should A fail), is crucial. Third, a great financial plan will clearly define prospective investments and and a blueprint for future retirement. Although there is a plethora of information available to assist and guide individuals on the path to financial security, it is becoming harder to practice consumer-friendly habits due to rising costs and rising interest rates. As costs continue to rise, you may find it difficult to actively decrease your rate of spending as costs rapidly rise. Should your decision-making skills be compromised, be honest with yourself about where you fell short and why. Then, problem-solve and brainstorm solutions for success. Suppress your penchant for being dishonest for denial can lead to erratic spending, which will be counterproductive to your goal of stopping blowing through the dough. |
WhitneyEducation enthusiast whose mission it is to see Financial Literacy receive well-deserved shine. Archives
September 2020
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