How money-savvy are you?

Finance and family go together. Don’t we all want to live well, have college money set aside for our kids, plan ahead for our retirement, and save for rainy days? Finance is one of the most complex things to write about, but it’s the one thing we all need to deal with on a daily basis. Do you know the statistics report that 44% of Americans don’t have enough cash to cover a $400 emergency? That is a very scary data! Let us look at some more stats from Forbes published in 2018.

• 33% of American adults have $0 saved for retirement.

• Just 57% Of adults In U.S. Are financially literate

• 38% of U.S. households have credit card debt.

We put so much time, effort and money to get a job; but once we start earning do we really manage the money well? We may be earning but not saving and/or growing our money. You are reading it right- there is a difference between saving money and growing money. Saving money is when you keep aside an amount from your earning while investing money is when you start increasing or growing your money. We can be frugal where we spend less than what we earn, and saving is good, but it is the extra money you have saved that you may need to invest to see the money grow for you. So though saving and investing often are used interchangeably, there is a big difference between the two.

This post may contain affiliate links and I may earn compensation when you click on the links at no additional cost to you.

I would suggest reading the book Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! It gives great information about teaching all family members (parents and kids) how to be aware of financial success, and explodes the myth that you need to earn a high income to become rich!

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

— Robert T. Kiyosaki

Among all the literacies we need to know in today’s world, financial literacy is as important as, say, media and digital literacy. Gone are the days when the 3 R’s taught in school were enough for students to get ready for the world. In addition to proficiency in reading, writing, and arithmetic; we need multiple other literacies to be successful in this era.

Let us start with the basics of financial literacy-

• Avoid any credit card debt, and if you have high-interest credit card debt then you should pay it off first.
• Start saving for emergency funds. This is the fund you will dip into if you lose your job or if anything were to happen to your regular monthly income. The usual recommendation is to save 5-6 months of your monthly expenses in a Money Marking saving account or any other High Saving online account where the money is easily accessible. But you can always start small; keep aside a small amount from every paycheck so you can slowly build your emergency fund.
• Once you have stashed enough into the emergency fund next step is to save in your tax-deferred retirement account like 401 K/IRA. If you get matching employer contribution then it’s foolishness to not contribute to 401 K as you are missing out on free money.
• The next step is to open a brokerage account. If you are just starting out then it’s advisable to open an account with Vanguard and then invest in Index Funds. It is highly recommended to opt for Index Fund investing with a low expense fee; f you have time and patience then do your due diligence and you can go into individual stock investing.
• In addition, there are various other options available in the present market like crowdfunding and P2P lending but these are suited for more experienced investors and who are willing to take more risk.

This list was compiled with my husband’s little expertise in investment for our family. If you would like to share your experiences, tips or thoughts about how money works for you; please comment below. We would love to include your success stories in our writing!