One way or another, you probably learned some important lessons about money as you grew up. Some things you learned from your parents (and possibly grandparents). They probably tried to teach you the things they believed were important. You may have learned other things about money (good or bad) by observing your family and others. If you were lucky you may have taken a class in high school that included a few lessons on money management. Regardless, your financial literacy is likely to have some gaps. Perhaps, you know you still have a lot to learn before you can manage your money with confidence.
A recent survey by the National Foundation for Credit Counseling (NFCC) found that 65 percent of people say their mother is intimidated by money, views managing money as a necessary evil, or has never managed money. About 730 people responded to the poll on the NFCC’s website, http://www.debtadvice.org/. Just 35 percent of those surveyed agreed their mother is “pretty savvy managing money, and enjoys it,” according to the poll. A survey regarding dad’s financial savvy might well have received similar responses from many of us.
Personal Finance Writer, Andrea Coombes went a step further by contacting six financial planners to find out what one money lesson they wish their mothers had taught them. That informal survey found that generally these money experts said their mothers did a good job modeling smart money habits, but still recognized some gaps in their education. Coombes article, Mom and Money: ‘Lessons I Wish She Had Taught me’, appeared in the Wall Street Journal on Mother’s Day.
The NFCC’s 2013 Financial Literacy Survey (FLS) results revealed that most people, 33 percent, learned their financial skills at home. Fewer than half of all states require a class in personal finance for graduation from high school. Accordingly, only five percent of the FLS respondents indicated that schools were their main source of personal finance skills.
Don’t let the gaps in your knowledge of personal finance keep you from making the most of your money. Financial self-help information can be found in libraries and bookstores, online, and through the NFCC or one of its 700 plus Member Agencies. You can jumpstart your financial education by reading a basic reference like Personal Finance for Dummies by Eric Tyson then reading his books on investing and mutual funds. You can ask people you trust for advice in areas where you need help. Soon you will have the confidence you need to create a budget, handle credit wisely, and invest for your future.
As a first step to long-term financial health you should take stock by thinking about the financial choices you have made in the past and the choices you would like to make in the future. If you have a hard time denying yourself something you want, look for ways to remove those temptations. You might try getting rid of some of your credit cards or your ATM card. If your problems are related to a job loss or health problems, what is your strategy for bouncing back? You can find plenty of help for dealing with those problems as well.
Start by asking yourself these questions: Do you have short-term and long-term financial goals? Do you make and follow a budget each month? Are your housing costs reasonable for your income? Do you keep your debts within recommended limits? Do you live from paycheck to paycheck or, worse, do you run out of money before the month ends? Do you keep your spending under control? Do you pay your credit cards off each month or find your credit card balances increasing each month? Do you have savings for emergencies and opportunities? Are you saving for retirement? Do you cover personal risks with health insurance, disability insurance, and life insurance (if others depend on your income), and your property risks with auto insurance and renter’s or homeowner’s insurance? Are you investing for the future through a 401k plan at work or on your own?
Be honest with yourself. What gaps in your personal financial knowledge do you need to address?