Take Stock of Your Financial Situation This Year
A recent poll by CNN found that nearly three of every four Americans (71%) admitted that money or financial matters were a source of significant stress in their lives. Nearly four of every five persons who participated in the survey said that they lived mostly paycheck to paycheck and had increased their overall credit card debt in the last year. Though financial stress can be the result of unforeseen events, far too often it’s the result of inadequate planning or attention to finances. Recognizing this, the United States Financial Literacy and Education Commission (USFLEC) took action in 2017, designating August 14 as National Financial Awareness Day.
What Is Financial Awareness?
The USFLEC considers financial awareness to be both a strategy and a mindset, which combine to help alleviate concerns about money. The key components of financial awareness include:
- Knowing how and having a strategy for saving money
- Understanding your income, as well as how you spend your money
- Knowing when to pay for things with cash on hand and when to use credit
- Knowing when to borrow funds to purchase an asset
- Knowing the advantages and disadvantages of different types of financial instruments or investments, such as stocks, bonds, mutual funds, real estate and cryptocurrency
- Knowing how to create and follow a budget
How Can You Get the Most Benefit Out of National Financial Awareness Day?
To make the most of Financial Awareness Day, you want to take a comprehensive approach to your financial situation:
- If you’re living by the seat of your pants, so to speak, it’s time to get organized. Know exactly how much you can expect to take home, as well as what your monthly outlay will be. You can do this digitally or with an old-fashioned file cabinet. The key is to do it.
- Look at your finances and determine what you would like to accomplish this year. Do you have debts that you want to pay off? Determine how much you need to pay each month and see how that impacts your disposable income. Ask yourself if having the debt paid off is worth making the temporary sacrifice.
- Start an investment program or commit to greater funding—Are you willing to make a small sacrifice now for peace of mind in the not-too-distant future? That’s typically what investing entails. There are many types of investments, too. Take the time to learn the benefits and challenges of each, so that you can make investments that fit your current financial situation and goals.
- Create a budget—For many, this can seem old-fashioned, but when you know exactly how much you have coming in and going out each month, you’ll find that your financial decisions are much easier.
Don’t let unnecessary stress over money affect your life. On National Financial Awareness Day, take the time to get a clear picture of where you are, where you want to be and what you need to do to get there.
