Financial literacy is more than just keeping your checkbook balanced. It’s about making the right decisions today to plan for your future. This edition of TRIO focuses on three things you can do to make the most out of your money.
Budgeting is knowing how much money you have coming in each month and then planning how it is spent. The first step is assessing how much money you have. This includes paychecks, savings, investments or any other sources of income. The second part is knowing what you owe. Knowing where your money comes from and where it goes is key to budgeting. Giving it direction is next. You just need commitment to make your budget work.
Creating a budget can be done on paper, using Excel or electronically using apps and online resources. Mint is a popular online budget and tracking app that allows you to manage your budget from your computer or phone. It connects to your bank and credit cards, loans and investments. It tracks your income plus spending trends. EveryDollar is a similar budget tool created by Dave Ramsey. No matter what format you use, the key to living on a budget is to live within your means. You can’t do that until you know what your income and expenses actually are.
Interest adds up. Most likely, it adds up faster than you think. Simple interest is interest that you earn on your initial investment. Compound interest, on the other hand, is based on your initial investment and the interest that it earns each year. Think it’s not that much of a difference? Think again. This short video by One Minute Economics shows the difference that compound interest can have on your investment.
Credit scores are based on your credit history and can range from 300 to 850. It is a rating that banks and lenders use to determine your creditworthiness and how likely you are to repay your debts. The lower the score, the more risk the applicant has of not repaying. This infographic by Credit.org breaks down what is considered a good credit score and provides estimates of the impact it will make on a mortgage, auto loan, insurance and credit card rates. The good news is that the credit score you have today is not set for life. A recent article by Experian offers simple ways to improve your credit score. Want to know what your credit score is? The Federal Trade Commission suggests calling 1-877-332-8228 or visit annualcreditreport.com, the only authorized website for free credit reports, to get a copy.
Want to learn more about the benefits of budgeting and financial freedom? Join us for our upcoming Financial Literacy short course. Call 405.377.3333 with questions or register here. To find out about more classes like this sign up for our monthly e-newsletter. View all of our upcoming courses in our digital catalog
Cara Adney is the Marketing and Media Relations Coordinator at Meridian Technology Center.