Americans are getting better at making ends meet, according to the 2013 National Financial Capability Study, but they are lacking in savings and debt management skills. Less than half of Americans surveyed had emergency savings of three months’ income, and only a quarter said they were happy with their finances. MyMoney.gov, a product of the Federal Financial Literacy and Education Commission, offers these four suggestions to help increase your financial literacy:
Review your pay stub. Know what the deductions are for and how to make adjustments. Make sure you are claiming the right number of exemptions, so you don’t end up owing taxes at the end of the year. If your employer offers benefits that are paid through payroll deductions, be sure you understand how much they are costing you and how they benefit you.
If you receive payments each month from an annuity or structured settlement, review the terms and conditions as compared to your current debt situation. It may be more beneficial to sell your future payments for a lump sum of cash now, which you could then use to help pay off any high-interest debt. Visit the J.G. Wentworth page on Facebook for more information about selling your future payments.
Saving is one of the most important financial habits you can have. It helps you plan for future purchases and protects you in the event of emergency. If you haven’t been saving, start now. Make it a rule to pay yourself first, even if it’s only $10. Set up automatic deposits from payroll to make sure money goes into your savings account regularly. Financial planning experts recommend building an emergency fund equal to three months’ income before you make any other financial moves, such as investing or taking out an auto loan. Investing enables you to make money on your savings. Before you invest money, consult a financial planner for assistance.
Use good personal finance habits:
Your ability to borrow money for large purchases such as car loans or mortgages depends on more than just your income. It also depends on your credit history. Know your credit scores, and how to improve them if necessary. Make a workable budget and stick to it. If you are thinking about a major purchase, don’t make any rash decisions. Take your time, and shop around for the best price and interest rate to make sure you get the best value for your money.