10 Things You Should Know about Personal Finance
The saying, “You can’t teach an old dog new tricks” is pure myth. After all, you probably taught an old dog or two how to play dead or jump through a hula-hoop when you were child, right?
Well, just like our furry friends, humans are never too old to learn new things either, and that fact is precisely why President Barack Obama declared April as National Financial Literacy Month. His hope is that Americans will commit to learning how to establish and maintain healthy financial habits.
To get you started, here are 10 topics you should learn to boost your financial literacy:
How to budget. The best way to understand your personal financial situation is to calculate how much you earn each month, and where all your money goes (i.e., how much you spend on recurring bills, entertainment, and living expenses such as housing, food, clothing and utilities). Use CareOne’s online budgeting tool to enter all your income and expense information in an easy-to-follow format. Then, track your expenses and don’t spend above your budgeted amount. Keep your budget realistic and you’re more inclined to follow it.
How credit works. Credit is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender later. It often materializes in the form of credit cards, or loans for a car, home, or education. But there are costs associated with using credit, so it’s important to compare the cost of various credit options with the actual features that come with the credit offering. Also, you must be responsible in how you use credit so that you don’t accumulate more debt than you can afford to repay.
How to check your credit report. Maintain good credit health by verifying the accuracy of your credit report regularly. Request an annual free copy of your report and ensure all the information listed is accurate. If it’s not, take action now to correct it. If you have bad credit, only time and consistent payments can repair it, so go easy on your spending and make timely payments against outstanding debts.
How to attack debt. View getting out of debt as a long-term goal, but set smaller milestone goals that you can celebrate achieving, such as paying off each individual creditor. If you need some ideas or support, join the discussion boards in the CareOne Community or learn about CareOne’s various debt relief plans.
How to choose a debt relief provider. Sometimes the best way to address your debt problems is to partner with a reputable debt relief company, such as one of the providers of CareOne Debt Relief Services. A reputable provider should have a solid record with the Better Business Bureau, multiple options to help you get out of debt, and a relatively long history of helping people get out of debt. The provider should also have the experience, resources, and certified counselors needed to work with you to help pay off debt and turn your financial life around.
How to build a nest egg. While most Americans lack a formal savings plan, you don’t have to be among them! Instead, identify ways to build up your savings reserves so that you can endure tough economic times without amassing big debts. Start saving as soon as possible – even if only a small amount – and make saving a regular part of your life. For example, set up automatic deposits from your paycheck into a savings or retirement account.
How to retire comfortably. Calculate how much money you’ll need to live comfortably and learn which financial resources can help you get there. Options range from basic savings accounts and certificates of deposit, to 401(k) and pension plans, mutual funds, stocks, bonds, and more. Boost your knowledge about these products and seek help from a certified financial planner when necessary.
How to select a health plan. Navigate the world of health care plansand learn which one best fits your situation. Also, read up on the new Affordable Care Act to learn about changes stemming from this health care reform legislation that could lower your costs and make care more accessible. Additionally, reduce your personal care expenses and participate in your employer’s health spending account plan, if available.
How to buy insurance. Many people don't know what kind of insurance to buy or how much their policy should be worth. But if you have a spouse who doesn’t work or other family members who rely on your financial support, you need to purchase enough life insurance so you don’t saddle your loved ones with bills and expenses they’re ill-prepared to pay once you’re gone. Be sure to think well beyond your funeral and burial expenses, too. Your insured amount, if you can afford it, should be enough to cover existing and future debts, college tuition costs for your young children, living expenses for your spouse, and more. In addition to life insurance, consider other types of insurance that protect your health and possessions like your home or automobile.
The importance of an estate plan. You might not think you have enough assets to warrant an estate plan, but creating a will ensures your wishes are carried out after you’re gone. Your needs will vary based on your assets, marital status, and whether you have children. Learn how to prepare a will, and identify personal belongings or monetary assets and insurance benefits you want to gift to certain people.
Once you have these topics under your belt, commit to never stop learning. New financial tools and topics are always emerging and there are endless opportunities to continue improving your financial fitness. Sign up for a class, check out books at your local library, or read more on CareOne’s online Article Library. As you learn, look up any unfamiliar terms on CareOne’s online financial glossary.
And, if you ever need a refresher about the importance of continued education, take some inspiration from Nola Ochs, who earned her bachelor’s degree when she was 95 year old. Ochs clearly proves that you’re never too old to learn new things.
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